þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
MARYLAND | 62-1763875 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
Title of each class | Name of each exchange on which registered | |
Common Stock, $.01 par value per share | New York Stock Exchange |
Item No. | Page | |||||||
PART I
|
||||||||
1. | ||||||||
5 | ||||||||
5 | ||||||||
7 | ||||||||
13 | ||||||||
14 | ||||||||
16 | ||||||||
17 | ||||||||
18 | ||||||||
19 | ||||||||
20 | ||||||||
20 | ||||||||
20 | ||||||||
1A. | 21 | |||||||
1B. | 30 | |||||||
2. | 30 | |||||||
3. | 30 | |||||||
4. | 30 | |||||||
|
||||||||
PART II
|
||||||||
5. | 31 | |||||||
31 | ||||||||
31 | ||||||||
6. | 31 | |||||||
7. | 34 | |||||||
34 | ||||||||
36 | ||||||||
38 | ||||||||
59 | ||||||||
63 | ||||||||
64 | ||||||||
7A. | 64 | |||||||
8. | 65 | |||||||
9. | 65 | |||||||
9A. | 65 | |||||||
|
||||||||
PART III
|
||||||||
10. | 69 | |||||||
11. | 69 | |||||||
12. | 69 | |||||||
13. | 70 | |||||||
14. | 70 | |||||||
|
||||||||
PART IV
|
||||||||
15. | 71 | |||||||
|
||||||||
SIGNATURES
|
||||||||
EX-10.7 REGISTRATION RIGHTS AGREEMENT | ||||||||
EX-10.15 NON-QUALIFIED STOCK OPTION AGREEMENT | ||||||||
EX-10.16 RESTRICTED STOCK AGREEMENT | ||||||||
EX-10.26 DIRECTOR AND OFFICER COMPENSATION | ||||||||
EX-21 LIST OF SUBSIDIARIES | ||||||||
EX-23.1 CONSENT OF ACCOUNTING FIRM | ||||||||
EX-31.1 SECTION 302 CEO CERTIFICATION | ||||||||
EX-31.2 SECTION 302 CFO CERTIFICATION | ||||||||
EX-32.1 SECTION 906 CEO CERTIFICATION | ||||||||
EX-32.2 SECTION 906 CFO CERTIFICATION |
| fluctuations in operating results because of changes in occupancy levels, competition, increases in cost of operations, fluctuations in interest rates and risks of operations; | ||
| changes in the privatization of the corrections and detention industry and the public acceptance of our services; | ||
| our ability to obtain and maintain correctional facility management contracts, including as the result of sufficient governmental appropriations and inmate disturbances, and the timing of the opening of new facilities and the commencement of new management contracts; | ||
| increases in costs to develop or expand correctional facilities that exceed original estimates, or the inability to complete such projects on schedule as a result of various factors, many of which are beyond our control, such as weather, labor conditions and material shortages, resulting in increased construction costs; | ||
| changes in government policy and in legislation and regulation of the corrections and detention industry that adversely affect our business; | ||
| the availability of debt and equity financing on terms that are favorable to us; and | ||
| general economic and market conditions. |
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Table of Contents
Table of Contents
Correctional Facilities
. Correctional facilities house and provide contractually agreed
upon programs and services to sentenced adult prisoners, typically prisoners on whom a
sentence in excess of one year has been imposed.
Table of Contents
Detention Facilities
. Detention facilities house and provide contractually agreed upon
programs and services to (i) prisoners being detained by the ICE, (ii) prisoners who are
awaiting trial who have been charged with violations of federal criminal law (and are
therefore in the custody of the USMS) or state criminal law, and (iii) prisoners who have
been convicted of crimes and on whom a sentence of one year or less has been imposed.
Juvenile Facilities
. Juvenile facilities house and provide contractually agreed upon
programs and services to juveniles, typically defined by applicable federal or state law as
being persons below the age of 18, who have been determined to be delinquents by a juvenile
court and who have been committed for an indeterminate period of time but who typically
remain confined for a period of six months or less. At December 31, 2005, we owned only
one such juvenile facility. The operation of juvenile facilities is not considered part of
our strategic focus.
Leased Facilities
. Leased facilities are facilities that are within one of the above
categories and that we own but do not manage. These facilities are leased to third-party
operators.
Remaining
Primary
Design
Security
Facility
Renewal
Facility Name
Customer
Capacity (A)
Level
Type (B)
Term
Options (C)
Florence, Arizona
USMS
2,304
Multi
Detention
May 2006
(2) 1 year
Eloy, Arizona
ICE
1,500
Medium
Detention
Indefinite
Florence, Arizona
State of
Alaska
1,824
Multi
Correctional
June 2008
(6) 1 year
California City, California
BOP
2,304
Medium
Correctional
September 2006
(4) 1 year
San Diego, California
ICE
1,216
Minimum/
Medium
Detention
June 2008
(5) 3 years
Las Animas, Colorado
State of Colorado
700
Medium
Correctional
June 2006
(2) 1 year
Table of Contents
Remaining
Primary
Design
Security
Facility
Renewal
Facility Name
Customer
Capacity (A)
Level
Type (B)
Term
Options (C)
Olney Springs, Colorado
State of Colorado
1,794
Medium
Correctional
June 2006
(2) 1 year
Walsenburg, Colorado
State of Colorado
752
Medium
Correctional
June 2006
(2) 1 year
Burlington, Colorado
State of Colorado
768
Medium
Correctional
June 2006
(2) 1 year
Nicholls, Georgia
State of
Georgia
1,524
Medium
Correctional
June 2006
(13) 1 year
McRae, Georgia
BOP
1,524
Medium
Correctional
November 2006
(6) 1 year
Lumpkin, Georgia
1,524
Medium
Correctional
Alamo, Georgia
State of
Georgia
1,524
Medium
Correctional
June 2006
(13) 1 year
Leavenworth, Kansas
USMS
767
Maximum
Detention
June 2006
(9) 2 months
Beattyville, Kentucky
State of Vermont
816
Minimum/
Medium
Correctional
June 2007
St. Mary, Kentucky
Commonwealth of
Kentucky
826
Minimum
Correctional
December 2007
(3) 2 year
Wheelwright, Kentucky
Commonwealth of
Kentucky
656
Minimum/
Medium
Correctional
July 2007
(4) 2 year
Appleton, Minnesota
State of Washington
1,550
Medium
Correctional
June 2007
Facility (I)
Tutwiler, Mississippi
State of
Hawaii
1,104
Medium
Correctional
June 2006
Shelby, Montana
State of Montana
568
Multi
Correctional
August 2007
(6) 2 year
Milan, New Mexico
BOP
1,129
Medium
Correctional
September 2006
(4) 1 year
Facility
Grants, New Mexico
State of
New Mexico
596
Multi
Correctional
June 2009
Estancia, New Mexico
USMS
910
Multi
Detention
Indefinite
Youngstown, Ohio
BOP
2,016
Medium
Correctional
May 2009
(3) 2 year
Cushing, Oklahoma
State of Oklahoma
960
Medium
Correctional
June 2006
(3) 1 year
Holdenville, Oklahoma
State of Oklahoma
960
Medium
Correctional
June 2006
(3) 1 year
Table of Contents
Remaining
Primary
Design
Security
Facility
Renewal
Facility Name
Customer
Capacity (A)
Level
Type (B)
Term
Options (C)
Watonga, Oklahoma
State of
Arizona
2,160
Medium
Correctional
June 2006
(1) 1 year
Sayre, Oklahoma
1,440
Medium
Correctional
Mason, Tennessee
USMS
600
Multi
Detention
February 2007
Memphis, Tennessee
Shelby County,
Tennessee
200
Secure
Juvenile
April 2015
Whiteville, Tennessee
State of Tennessee
1,536
Medium
Correctional
September 2006
(2) 1 year
Bridgeport, Texas
State of
Texas
200
Medium
Correctional
February 2007
(4) 1 year
Eden, Texas
BOP
1,225
Medium
Correctional
April 2006
(1) 1 year
Houston, Texas
ICE
905
Medium
Detention
September 2006
(2) 1 year
Laredo, Texas
ICE
258
Minimum/
Medium
Detention
Indefinite
Laredo, Texas
USMS
480
Medium
Detention
February 2007
Facility
Mineral Wells, Texas
State of
Texas
2,103
Minimum
Correctional
February 2007
(4) 1 year
Taylor, Texas
ICE
480
Minimum
Detention
Indefinite
District of
Columbia
1,500
Medium
Detention
March 2017
Panama City, Florida
State of
Florida
750
Medium
Correctional
June 2007
Panama City, Florida
Bay County,
Florida
1,150
Multi
Detention
September 2006
Lecanto, Florida
Citrus County,
Florida
400
Multi
Detention
September 2015
(1) 5 year
Quincy, Florida
State of
Florida
1,136
Minimum/
Medium
Correctional
June 2007
Brooksville, Florida
Hernando
County, Florida
730
Multi
Detention
October 2010
Lake City, Florida
State of
Florida
893
Secure
Correctional
June 2006
Boise, Idaho
State of
Idaho
1,270
Minimum/
Medium
Correctional
June 2009
Table of Contents
Remaining
Primary
Design
Security
Facility
Renewal
Facility Name
Customer
Capacity (A)
Level
Type (B)
Term
Options (C)
Indianapolis, Indiana
Marion County,
Indiana
1,030
Multi
Detention
December 2006
Winnfield, Louisiana
State of
Louisiana
1,538
Medium/
Maximum
Correctional
September 2006
(1) 2 year
Greenwood, Mississippi
State of
Mississippi
1,172
Minimum/Medium
Correctional
September 2006
(1) 1 year
Woodville, Mississippi
State of
Mississippi
1,000
Medium
Correctional
September 2005
(3) 1 year
Elizabeth, New Jersey
ICE
300
Minimum
Detention
September 2008
(5) 3 year
Chattanooga, Tennessee
Hamilton County,
Tennessee
918
Multi
Detention
February 2007
Indefinite
Clifton, Tennessee
State of
Tennessee
1,676
Medium
Correctional
July 2007
Facility
Nashville, Tennessee
Davidson
County,
Tennessee
1,092
Multi
Detention
July 2006
(2) 1 year
Whiteville, Tennessee
State of
Tennessee
2,016
Medium
Correctional
May 2006
(4) 3 year
Overton, Texas
State of
Texas
500
Minimum/
Medium
Correctional
January 2007
(2) 1 year
Bartlett, Texas
State of
Texas
1,001
Minimum/
Medium
Correctional
January 2007
(4) 1 year
Henderson, Texas
State of
Texas
1,980
Minimum/
Medium
Correctional
January 2007
(4) 1 year
Dallas, Texas
State of
Texas
2,216
Minimum/
Medium
Correctional
January 2007
(4) 1 year
Diboll, Texas
State of
Texas
518
Minimum/
Medium
Correctional
January 2007
(2) 1 year
Liberty, Texas
Liberty County,
Texas
380
Multi
Detention
January 2007
(1) 3 year
Jacksboro, Texas
State of
Texas
1,031
Minimum/
Medium
Correctional
January 2007
(4) 1 year
Raymondville, Texas
State of
Texas
1,069
Minimum/
Medium
Correctional
January 2007
(4) 1 year
Live Oak, California
Cornell
Corrections
240
Minimum
Owned/Leased
September 2010
Cincinnati, Ohio
Hamilton
County, Ohio
850
Medium
Owned/Leased
February 2006
(1) 1 year
Houston, Texas
Community
Education
Partners
Non-secure
Owned/Leased
June 2008
(3) 5 year
Table of Contents
(A)
Design capacity measures the number of beds, and accordingly, the number of inmates
each facility is designed to accommodate. Facilities housing detainees on a short term
basis may exceed the original intended design capacity for sentenced inmates due to the
lower level of services required by detainees in custody for a brief period. From time to
time we may evaluate the design capacity of our facilities based on customers using the
facilities, and the ability to reconfigure space with minimal capital outlays. As a
result, the design capacity of certain facilities may vary from the design capacity
previously presented. We believe design capacity is an appropriate measure for evaluating
prison operations, because the revenue generated by each facility is based on a per diem or
monthly rate per inmate housed at the facility paid by the corresponding contracting
governmental entity.
(B)
We manage numerous facilities that have more than a single function (e.g., housing both
long-term sentenced adult prisoners and pre-trial detainees). The primary functional
categories into which facility types are identified were determined by the relative size of
prisoner populations in a particular facility on December 31, 2005. If, for example, a
1,000-bed facility housed 900 adult prisoners with sentences in excess of one year and 100
pre-trial detainees, the primary functional category to which it would be assigned would be
that of correctional facilities and not detention facilities. It should be understood that
the primary functional category to which multi-user facilities are assigned may change from
time to time.
(C)
Remaining renewal options represents the number of renewal options, if applicable, and
the term of each option renewal.
(D)
The facility is subject to a ground lease with the County of San Diego whereby the
initial lease term is 18 years from the commencement of the contract, as defined. The
County has the right to buy out all, or designated portions of, the premises at various
times prior to the expiration of the term at a price generally equal to the cost of the
premises, or the designated portion of the premises, less an allowance for the amortization
over a 20-year period. Upon expiration of the lease, ownership of the facility
automatically reverts to the County of San Diego.
(E)
The facility is subject to a purchase option held by Huerfano County which grants
Huerfano County the right to purchase the facility upon an early termination of the
contract at a price generally equal to the cost of the facility plus 80% of the percentage
increase in the Consumer Price Index, cumulated annually.
(F)
The facility is subject to a purchase option held by the Georgia Department of
Corrections, or GDOC, which grants the GDOC the right to purchase the facility for the
lesser of the facilitys depreciated book value or fair market value at any time during the
term of the contract between us and the GDOC.
(G)
During the fourth quarter of 2004, 273 beds were completed and available for use. The
construction on the remaining 1,251 beds was completed and available for use in October
2005. We are currently pursuing new management contracts and other opportunities to take
advantage of the beds that are available at the Stewart County Correctional Facility, but
can provide no assurance that we will be successful in doing so.
(H)
The facility is subject to a deed of conveyance with the city of Wheelwright, KY which
included provisions that would allow assumption of ownership by the city of Wheelwright
under the following occurrences: (1) we cease to operate the facility for more than two
years, (2) our failure to maintain at least one employee for a period of sixty consecutive
days, or (3) a conversion to a maximum security facility based upon classification by the
Kentucky Corrections Cabinet.
(I)
The facility is subject to a purchase option held by the Tallahatchie County
Correctional Authority which grants Tallahatchie County Correctional Authority the right to
purchase the facility at any time during the contract at a price generally equal to the
cost of the premises less an allowance for amortization over a 20-year period. During
October 2005, we completed an amendment to extend the amortization period through 2035,
which could be further extended to 2050 in the event we expand the facility by at least 200
beds.
(J)
The state of Montana has an option to purchase the facility generally at any time
during the term of the contract with us at fair market value, less the then present value
of a pre-determined portion of per diem payments made to us by the state of Montana.
(K)
The facility is subject to a purchase option held by the Oklahoma Department of
Corrections, or ODC, which grants the ODC the right to purchase the facility at its fair
market value at any time.
(L)
During the third quarter of 2003, all of the Wisconsin inmates housed at the North Fork
Correctional Facility were transferred to the Diamondback Correctional Facility in order to
satisfy a contractual provision mandated by the state of Wisconsin. Upon completion of the
inmate transfers, North Fork Correctional Facility was idled. We are currently pursuing new
management contracts and other opportunities to take advantage of the beds that are
available at the North Fork Correctional Facility and expect to reopen the facility in the
first half of 2006, but can provide no assurance that we will be successful in doing so.
(M)
Upon the conclusion of the thirty-year ground lease with Shelby County, Tennessee, the
facility will become the property of Shelby County. Prior to such time, if the County
terminates the lease without cause, breaches the lease or the State fails to fund the
contract, we may purchase the property for $150,000. If we terminate the lease without
cause, or breach the contract, we will be required to purchase the property for its fair
market value as agreed to by the County and us.
(N)
The state of Tennessee has the option to purchase the facility in the event of our
bankruptcy, or upon an operational breach, as defined, at a price equal to the book value
of the facility, as defined.
(O)
The District of Columbia has the right to purchase the facility at any time during the
term of the contract at a price generally equal to the present value of the remaining lease
payments for the premises. Upon expiration of the lease, ownership of the facility
automatically reverts to the District of Columbia.
(P)
The alternative educational facility is currently configured to accommodate 900 at-risk
juveniles and may be expanded to accommodate a total of 1,400 at-risk juveniles.
Table of Contents
Maintaining and expanding our existing customer relationships and continuing to fill
existing beds within our facilities, while maintaining an adequate inventory of
available beds that we believe provides us with flexibility and a competitive advantage
when bidding for new management contracts;
Enhancing the terms of our existing contracts; and
Establishing relationships with new customers who have either previously not
outsourced their correctional management needs or have utilized other private
enterprises.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
ITEM 1A.
RISK FACTORS.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
authorize us to issue blank check preferred stock, which is preferred stock that
can be created and issued by our board of directors, without stockholder approval, with
rights senior to those of common stock;
provide that directors may be removed with or without cause only by the affirmative
vote of at least a majority of the votes of shares entitled to vote thereon; and
establish advance notice requirements for submitting nominations for election to the
board of directors and for proposing matters that can be acted upon by stockholders at
a meeting.
make it more difficult for us to satisfy our obligations with respect to our indebtedness;
increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flow from operations to
payments on our indebtedness, thereby reducing the availability of our cash flow to
fund working capital, capital expenditures, and other general corporate purposes;
limit our flexibility in planning for, or reacting to, changes in our business and
the industry in which we operate;
place us at a competitive disadvantage compared to our competitors that have less
debt; and
limit our ability to borrow additional funds or refinance existing indebtedness on
favorable terms.
Table of Contents
limitations on incurring additional indebtedness;
limitations on the sale of assets;
limitations on the declaration and payment of dividends or other restricted payments;
limitations on transactions with affiliates; and
limitations on liens.
Table of Contents
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
ITEM 2.
PROPERTIES.
ITEM 3.
LEGAL PROCEEDINGS.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Table of Contents
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
ITEM 5.
MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES.
SALES PRICE
HIGH
LOW
$
43.06
$
36.67
$
39.77
$
35.25
$
40.14
$
36.70
$
45.40
$
36.51
$
35.78
$
27.66
$
39.89
$
33.50
$
41.15
$
32.54
$
40.81
$
33.53
Table of Contents
SELECTED HISTORICAL FINANCIAL INFORMATION
(in thousands, except per share data)
For the Years Ended December 31,
2005
2004
2003
2002
2001
$
1,188,649
$
1,122,542
$
1,003,865
$
906,556
$
881,884
3,991
3,845
3,742
3,701
5,718
1,192,640
1,126,387
1,007,607
910,257
887,602
898,793
850,366
747,800
694,372
673,003
57,053
48,186
40,467
36,907
34,568
59,882
54,445
52,884
53,417
56,325
1,015,728
952,997
841,151
784,696
763,896
176,912
173,390
166,456
125,561
123,706
63,928
69,177
74,446
87,393
125,771
35,269
101
6,687
36,670
(2,900
)
(2,206
)
(14,554
)
263
943
(414
)
(359
)
483
77,452
103,169
88,637
4,063
12,006
(26,888
)
(41,514
)
52,352
63,284
3,358
50,564
61,655
140,989
67,347
15,364
(442
)
888
794
5,013
10,330
(80,276
)
50,122
62,543
141,783
(7,916
)
25,694
(1,462
)
(15,262
)
(20,959
)
(20,024
)
$
50,122
$
61,081
$
126,521
$
(28,875
)
$
5,670
Table of Contents
SELECTED HISTORICAL FINANCIAL INFORMATION
(in thousands, except per share data)
(continued)
For the Years Ended December 31,
2005
2004
2003
2002
2001
$
1.31
$
1.71
$
3.90
$
1.68
$
(0.19
)
(0.01
)
0.03
0.02
0.18
0.42
(2.90
)
$
1.30
$
1.74
$
3.92
$
(1.04
)
$
0.23
$
1.26
$
1.53
$
3.42
$
1.51
$
(0.19
)
(0.01
)
0.02
0.02
0.16
0.42
(2.49
)
$
1.25
$
1.55
$
3.44
$
(0.82
)
$
0.23
38,475
35,059
32,245
27,669
24,380
40,281
39,780
38,049
32,208
24,380
December 31,
2005
2004
2003
2002
2001
$
2,086,313
$
2,023,078
$
1,959,028
$
1,874,071
$
1,971,280
$
975,636
$
1,002,295
$
1,003,428
$
955,959
$
963,600
$
1,169,682
$
1,207,084
$
1,183,563
$
1,140,073
$
1,224,119
$
916,631
$
815,994
$
775,465
$
733,998
$
747,161
Table of Contents
ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Owned
and
Managed
Effective Date
Managed
Only
Leased
Incomplete
Total
38
21
3
1
63
January 15, 2004
5
5
April 1, 2004
1
1
August 9, 2004
(1
)
(1
)
October 1, 2004
(1
)
(1
)
38
25
3
1
67
July 1, 2005
(1
)
(1
)
October 10, 2005
1
(1
)
39
24
3
66
Table of Contents
For the Years Ended
December 31,
2005
2004
$
50.69
$
49.21
28.50
27.59
9.39
9.21
37.89
36.80
$
12.80
$
12.41
25.3
%
25.2
%
91.4
%
94.9
%
Table of Contents
Table of Contents
For the Years Ended
December 31,
2005
2004
$
58.95
$
57.02
31.79
30.81
10.19
9.96
41.98
40.77
$
16.97
$
16.25
28.8
%
28.5
%
88.3
%
90.3
%
$
37.46
$
36.68
23.22
22.42
8.12
7.99
31.34
30.41
$
6.12
$
6.27
16.3
%
17.1
%
96.7
%
103.3
%
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
For the Years Ended
December 31,
2004
2003
$
49.21
$
51.10
27.59
27.92
9.21
9.74
36.80
37.66
$
12.41
$
13.44
25.2
%
26.3
%
94.9
%
93.1
%
Table of Contents
For the Years Ended
December 31,
2004
2003
$
57.02
$
55.25
30.81
29.34
9.96
10.13
40.77
39.47
$
16.25
$
15.78
28.5
%
28.6
%
90.3
%
88.6
%
$
36.68
$
41.94
22.42
24.80
7.99
8.89
30.41
33.69
$
6.27
$
8.25
17.1
%
19.7
%
103.3
%
104.7
%
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Table of Contents
Estimated cost to
No. of
Estimated
complete
Facility
beds
completion date
(in thousands)
Third
1,596
quarter 2006
$
18,058
Lecanto, FL
360
First quarter 2007
17,269
Eloy, AZ
1,896
Second half 2007
97,108
3,852
$
132,435
Table of Contents
Table of Contents
Table of Contents
Payments Due By Year Ended December 31,
2006
2007
2008
2009
2010
Thereafter
Total
$
11,538
$
103,250
$
34,300
$
$
$
825,000
$
974,088
16,627
642
17,269
225
225
211
211
$
28,601
$
103,892
$
34,300
$
$
$
825,000
$
991,793
1.
A modified prospective method in which compensation cost is recognized beginning
with the effective date (a) based on the requirements of SFAS 123R for all share-based
Table of Contents
payments granted after the effective date and (b) based on the requirements of SFAS 123
for all awards granted to employees prior to the effective date of SFAS 123R that remain
unvested on the effective date.
2.
A modified retrospective method which includes the requirements of the modified
prospective method described above, but also permits entities to restate based on the
amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either
for (a) all prior periods presented or (b) prior interim periods of the year of adoption.
Table of Contents
Table of Contents
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of the assets of the Company;
(ii)
provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the Company are being made only in
accordance with authorizations of management and directors of the Company; and
(iii)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the Companys assets that could have a
material effect on the financial statements.
Table of Contents
Table of Contents
/s/ Ernst & Young LLP
Ernst & Young LLP
Table of Contents
69
70
Table of Contents
(a)
(b)
(c)
Number of Securities
Remaining Available
for Future Issuance
Number of Securities
Weighted - Average
Under Equity
to be Issued Upon
Exercise Price of
Compensation Plan
Exercise of
Outstanding
(Excluding Securities
Outstanding Options,
Options, Warrants
Reflected in Column
Plan Category
Warrants and Rights
and Rights
(a))
3,329,210
$
25.86
1,216,428
(1)
3,329,210
$
25.86
1,216,428
(1)
(1)
Reflects shares of common stock available for issuance under our Amended and Restated
1997 Employee Share Incentive Plan and Amended and Restated 2000 Stock Incentive Plan, the
only equity compensation plans approved by our stockholders under which we continue to
grant awards.
Table of Contents
71
(1)
Financial Statements.
The financial statements as set forth under Item 8 of this annual report on Form
10-K have been filed herewith, beginning on page F-1 of this report.
(2)
Financial Statement Schedules.
Schedules for which provision is made in Regulation S-X are either not required to
be included herein under the related instructions or are inapplicable or the related
information is included in the footnotes to the applicable financial statements and,
therefore, have been omitted.
(3)
The Exhibits are listed in the Index of Exhibits required by Item 601 of
Regulation S-K included herewith.
Table of Contents
72
CORRECTIONS CORPORATION OF AMERICA
By:
/s/ John D. Ferguson
John D. Ferguson, President and Chief Executive Officer
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
March 7, 2006
February 22, 2006
Table of Contents
73
74
75
76
77
78
F - 1
Exhibit Number
Description of Exhibits
Amended and Restated Charter of the Company (previously
filed as Exhibit 3.1 to the Companys Annual Report on Form
10-K (Commission File no. 00116109), filed with the
Commission on April 17, 2001 and incorporated herein by
this reference).
Amendment to the Amended and Restated Charter of the
Company effecting the reverse stock split of the Companys
Common Stock and a related reduction in the stated capital
stock of the Company (previously filed as Exhibit 3.1 to
the Companys Quarterly Report on Form 10-Q (Commission
File no. 00116109), filed with the Commission on August
13, 2001 and incorporated herein by this reference).
Third Amended and Restated Bylaws of the Company
(previously filed as Exhibit 3.3 to the Companys Amendment
No. 3 to its Registration Statement on Form S-4 (Commission
File no. 33396721), filed with the Commission on December
30, 2002 and incorporated herein by this reference).
Provisions defining the rights of stockholders of the
Company are found in Article V of the Amended and Restated
Charter of the Company, as amended (included as Exhibits
3.1 and 3.2 hereto), and Article II of the Third Amended
and Restated Bylaws of the Company (included as Exhibit 3.3
hereto).
Specimen of certificate representing shares of the
Companys Common Stock (previously filed as Exhibit 4.2 to
the Companys Annual Report on Form 10-K (Commission File
no. 00116109), filed with the Commission on March 22, 2002
and incorporated herein by this reference).
Indenture, dated as of May 7, 2003, by and among the
Company, certain of its subsidiaries and U.S. Bank National
Association, as Trustee (previously filed as Exhibit 4.1 to
the Companys Current Report on Form 8-K. (Commission File
no. 00116109), filed with the Commission on May 7, 2003
and incorporated herein by this reference).
Supplemental Indenture, dated as of May 7, 2003, by and
among the Company, certain of its subsidiaries and U.S.
Bank National Association, as Trustee, providing for the
Companys 7.5% Senior Notes due 2011 (7.5% Notes), with
form of note attached (previously filed as Exhibit 4.2 to
the Companys Current Report on Form 8-K (Commission File
no. 00116109), filed with the Commission on May 7, 2003
and incorporated herein by this reference).
Table of Contents
Exhibit Number
Description of Exhibits
First Supplement, dated as of August 8, 2003, to the
Supplemental Indenture, dated as of May 7, 2003, by and
among the Company, certain of its subsidiaries and U.S.
Bank National Association, as Trustee, providing for the
Companys 7.5% Notes (previously filed as Exhibit 4.2 to
the Companys Quarterly Report on Form 10-Q (Commission
File no. 00116109), filed with the Commission on August
12, 2003 and incorporated herein by this reference).
Second Supplement, dated as of August 8, 2003, to the
Supplemental Indenture, dated as of May 7, 2003, by and
among the Company, certain of its subsidiaries and U.S.
Bank National Association, as Trustee, providing for the
Companys 7.5% Notes (previously filed as Exhibit 4.3 to
the Companys Quarterly Report on Form 10-Q (Commission
File no. 00116109), filed with the Commission on August
12, 2003 and incorporated herein by this reference).
Indenture, dated as of March 23, 2005, by and among the
Company, certain of its subsidiaries and U.S. Bank National
Association, as Trustee, providing for the Companys 6.25%
Senior Notes due 2013 with form of note attached
(previously filed as Exhibit 4.1 to the Companys
Current Report on Form 8-K (Commission File no. 00116109),
filed with the Commission on March 24, 2005 and
incorporated herein by this reference).
Indenture, dated as of January 23, 2006, by and among the
Company, certain of its subsidiaries and U.S. Bank National
Association, as Trustee (previously filed as Exhibit 4.1 to
the Companys Current Report on Form 8-K (Commission File
no. 00116109), filed with the Commission on January 24,
2006 and incorporated herein by this reference).
Supplemental Indenture, dated as of January 23, 2006, by
and among the Company, certain of its subsidiaries and U.S.
Bank National Association, as Trustee, providing for the
Companys 6.75% Senior Notes due 2014, with form of note
attached (previously filed as Exhibit 4.2 to the Companys
Current Report on Form 8-K (Commission File no. 00116109),
filed with the Commission on January 24, 2006 and
incorporated herein by this reference).
Credit Agreement, dated as of February 3, 2006, by and
among the Company, as Borrower, the lenders who are or may
become a party to the agreement, and Wachovia Bank,
National Association, as Administrative Agent for the
lenders (previously filed as Exhibit 10.1 to the Companys
Current Report on Form 8-K (Commission File no. 00116109),
filed with the Commission on February 7, 2006 and
incorporated herein by this reference).
Table of Contents
Exhibit Number
Description of Exhibits
Note Purchase Agreement, dated as of January 1, 1999, by
and between the Company and PMI Mezzanine Fund, L.P.,
including, as Exhibit R-1 thereto, Registration Rights
Agreement, dated as of January 1, 1999, by and between the
Company and PMI Mezzanine Fund, L.P. (previously filed as
Exhibit 10.22 to the Companys Current Report on Form 8-K
(Commission File no. 025245), filed with the Commission on
January 6, 1999 and incorporated herein by this reference).
Amendment to Note Purchase Agreement and Note by and
between the Company and PMI Mezzanine Fund, L.P., dated
April 28, 2003 (previously filed as Exhibit 10.2 to
Amendment No. 2 to the Companys Registration Statement on
Form S-3 (Commission File no. 333104240), filed with the
Commission on April 28, 2003 and incorporated herein by
this reference).
Waiver and Amendment, dated as of June 30, 2000, by and
between the Company and PMI Mezzanine Fund, L.P., with form
of replacement note attached thereto as Exhibit B
(previously filed as Exhibit 10.5 to the Companys Current
Report on Form 8-K (File no. 025245), filed with the
Commission on July 3, 2000 and incorporated herein by this
reference).
Waiver and Amendment, dated as of March 5, 2001, by and
between the Company and PMI Mezzanine Fund, L.P.,
including, as an exhibit thereto, Amendment to Registration
Rights Agreement (previously filed as Exhibit 10.10 to the
Companys Annual Report on Form 10-K (Commission File no.
00116109), filed with the Commission on April 17, 2001 and
incorporated herein by this reference).
Form of Amendment No. 2 to Registration Rights Agreement by
and between the Company and PMI Mezzanine Fund, L.P.
(previously filed as Exhibit 10.3 to Amendment No. 2 to the
Companys Registration Statement on Form S-3 (Commission
File no. 333104240), filed with the Commission on April
28, 2003 and incorporated herein by this reference).
Registration Rights Agreement, dated as of December 31,
1998, by and between Correctional Management Services
Corporation, a predecessor of the Company, and CFE, Inc.
The Companys Amended and Restated 1997 Employee Share
Incentive Plan (previously filed as Exhibit 10.15 to the
Companys Annual Report on Form 10-K (Commission File no.
00116109), filed with the Commission on March 12, 2004 and
incorporated herein by this reference).
Form of Non-qualified Stock Option Agreement for the
Companys Amended and Restated 1997 Employee Share
Incentive Plan (previously filed as Exhibit 10.17 to the
Companys Annual Report on Form 10-K (Commission File no.
00116109), filed with the Commission on March 7, 2005 and
incorporated herein by this reference).
Table of Contents
Exhibit Number
Description of Exhibits
Old Prison Realtys Non-Employee Trustees Compensation
Plan (previously filed as Exhibit 4.3 to Old Prison
Realtys Registration Statement on Form S-8 (Commission
File no. 33358339), filed with the Commission on July 1,
1998 and incorporated herein by this reference).
Old CCAs 1995 Employee Stock Incentive Plan, effective as
of March 20, 1995 (previously filed as Exhibit 4.3 to Old
CCAs Registration Statement on Form S-8 (Commission File
no. 3361173), filed with the Commission on July 20, 1995
and incorporated herein by this reference).
Old CCAs Non-Employee Directors Compensation Plan
(previously filed as Appendix A to Old CCAs definitive
Proxy Statement relating to Old CCAs 1998 Annual Meeting
of Shareholders (Commission File no. 00113560), filed with
the Commission on March 31, 1998 and incorporated herein by
this reference).
The Companys Amended and Restated 2000 Stock Incentive
Plan (previously filed as Exhibit 10.20 to the Companys
Annual Report on Form 10-K (Commission File no. 00116109),
filed with the Commission on March 12, 2004 and
incorporated herein by this reference).
Amendment No. 1 to Amended and Restated Corrections
Corporation of America 2000 Stock Incentive Plan
(previously filed as Exhibit 10.1 to the Companys
Quarterly Report on Form 10-Q (Commission File no.
00116109), filed with the Commission on November 5, 2004
and incorporated herein by this reference).
Form of Non-qualified Stock Option Agreement for the
Companys Amended and Restated 2000 Stock Incentive Plan
(supersedes previous form filed as Exhibit 99.2 to the
Companys Current Report on Form 8-K (Commission File No.
00116109) filed with the Commission on February 21, 2006).
Form of Restricted Stock Agreement for the Companys
Amended and Restated 2000 Stock Incentive Plan (supersedes
previous form filed as Exhibit 99.1 to the Companys
Current Report on Form 8-K (Commission File No.
00116109) filed with the Commission on February 21, 2006).
Form of Resale Restriction Agreement for certain stock
option award agreements issued under the Companys Amended
and Restated 1997 Employee Share Incentive Plan and the
Companys Amended and Restated 2000 Stock Incentive Plan
(previously filed as Exhibit 10.1 to the Companys Current
Report on Form 8-K (Commission File no. 00116109), filed
with the Commission on December 14, 2005 and incorporated
herein by this reference).
Table of Contents
Exhibit Number
Description of Exhibits
Form of Resale Restriction Agreement for key employees for
certain stock option award agreements issued under the
Companys Amended and Restated 1997 Employee Share
Incentive Plan and the Companys Amended and Restated 2000
Stock Incentive Plan (previously filed as Exhibit 10.2 to
the Companys Current Report on Form 8-K (Commission File
no. 00116109), filed with the Commission on December 14,
2005 and incorporated herein by this reference).
Employment Agreement, dated as of August 4, 2000, by and
between the Company and John D. Ferguson, with form of
option agreement included as Exhibit A thereto (previously
filed as Exhibit 10.1 to the Companys Quarterly Report on
Form 10-Q (File no. 025245), filed with the Commission on
August 14, 2000 and incorporated herein by this reference).
First Amendment to Employment Agreement with John D.
Ferguson, dated as of December 31, 2002, by and between the
Company and John D. Ferguson (previously filed as Exhibit
10.30 to the Companys Annual Report on Form 10-K
(Commission File no. 00116109), filed with the Commission
on March 28, 2003 and incorporated herein by this
reference).
Employment Agreement, dated as of January 3, 2005, by and
between the Company and Irving E. Lingo, Jr. (previously
filed as Exhibit 10.1 to the Companys Current Report on
Form 8-K (Commission File no. 00116109), filed with the
Commission on January 6, 2005 and incorporated herein by
this reference).
Employment Agreement, dated as of February 1, 2003, by and
between the Company and Kenneth A. Bouldin (previously
filed as Exhibit 10.34 to the Companys Annual Report on
Form 10-K (Commission File no. 00116109), filed with the
Commission on March 28, 2003 and incorporated herein by
this reference).
Employment Agreement dated as of May 1, 2003, by and
between the Company and G.A. Puryear IV (previously filed
as Exhibit 10.1 to the Companys Quarterly Report on Form
10-Q (Commission File no. 00116109), filed with the
Commission on August 12, 2003 and incorporated herein by
this reference).
Employment Agreement, dated as of January 3, 2005, by and
between the Company and Richard P. Seiter (previously filed
as Exhibit 10.2 to the Companys Current Report on Form 8-K
(Commission File no. 00116109), filed with the Commission
on January 6, 2005 and incorporated herein by this
reference).
Employment Agreement, dated as of June 20, 2005, by and
between the Company and Anthony M. DaDante (previously
filed as Exhibit 10.1 to the Companys Current Report on
Form 8-K (Commission File no 00116109), filed with the
Commission on June 22, 2005 and incorporated herein by this
reference).
Table of Contents
Exhibit Number
Description of Exhibits
Summary of Director and Executive Officer Compensation.
Subsidiaries of the Company.
Consent of Ernst & Young LLP.
Certification of the Companys Chief Executive Officer
pursuant to Securities and Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Companys Chief Financial Officer
pursuant to Securities and Exchange Act Rules 13a-14(a) and
15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Certification of the Companys Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of the Companys Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Table of Contents
F-2
F-3
F-4
F-5
F-7
F-10
Table of Contents
F - 2
Corrections Corporation of America
/s/ Ernst & Young LLP
Ernst & Young LLP
March 1, 2006
Table of Contents
December 31, | ||||||||
2005 | 2004 | |||||||
ASSETS
|
||||||||
Cash and cash equivalents
|
$ | 64,901 | $ | 50,938 | ||||
Restricted cash
|
11,284 | 12,965 | ||||||
Investments
|
19,014 | 8,686 | ||||||
Accounts receivable, net of allowance of $2,258 and $1,380, respectively
|
176,560 | 154,288 | ||||||
Deferred tax assets
|
32,488 | 56,410 | ||||||
Prepaid expenses and other current assets
|
15,884 | 16,636 | ||||||
Current assets of discontinued operations
|
| 2,365 | ||||||
|
||||||||
Total current assets
|
320,131 | 302,288 | ||||||
|
||||||||
Property and equipment, net
|
1,710,794 | 1,659,858 | ||||||
|
||||||||
Investment in direct financing lease
|
16,322 | 17,073 | ||||||
Goodwill
|
15,246 | 15,563 | ||||||
Other assets
|
23,820 | 28,144 | ||||||
Non-current assets of discontinued operations
|
| 152 | ||||||
|
||||||||
|
||||||||
Total assets
|
$ | 2,086,313 | $ | 2,023,078 | ||||
|
||||||||
|
||||||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
||||||||
|
||||||||
Accounts payable and accrued expenses
|
$ | 158,267 | $ | 144,815 | ||||
Income taxes payable
|
1,435 | 22,207 | ||||||
Current portion of long-term debt
|
11,836 | 3,182 | ||||||
Current liabilities of discontinued operations
|
1,774 | 2,061 | ||||||
|
||||||||
Total current liabilities
|
173,312 | 172,265 | ||||||
|
||||||||
Long-term debt, net of current portion
|
963,800 | 999,113 | ||||||
Deferred tax liabilities
|
12,087 | 14,132 | ||||||
Other liabilities
|
20,483 | 21,574 | ||||||
|
||||||||
Total liabilities
|
1,169,682 | 1,207,084 | ||||||
|
||||||||
|
||||||||
Commitments and contingencies
|
||||||||
|
||||||||
Common stock $0.01 par value; 80,000 shares authorized; 39,694 and
35,415 shares issued
and outstanding at December 31, 2005 and 2004, respectively
|
397 | 354 | ||||||
Additional paid-in capital
|
1,506,184 | 1,451,885 | ||||||
Deferred compensation
|
(5,563 | ) | (1,736 | ) | ||||
Retained deficit
|
(584,387 | ) | (634,509 | ) | ||||
|
||||||||
Total stockholders equity
|
916,631 | 815,994 | ||||||
|
||||||||
|
||||||||
Total liabilities and stockholders equity
|
$ | 2,086,313 | $ | 2,023,078 | ||||
|
F - 3
F - 4
F - 5
F - 6
Accumulated | ||||||||||||||||||||||||||||||||
Series A | Series B | Additional | Retained | Other | Total | |||||||||||||||||||||||||||
Preferred | Preferred | Common | Paid-In | Deferred | Earnings | Comprehensive | Stockholders | |||||||||||||||||||||||||
Stock | Stock | Stock | Capital | Compensation | (Deficit) | Income (Loss) | Equity | |||||||||||||||||||||||||
BALANCE, December 31, 2002
|
$ | 107,500 | $ | 107,831 | $ | 280 | $ | 1,343,066 | $ | (1,604 | ) | $ | (822,111 | ) | $ | (964 | ) | $ | 733,998 | |||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 141,783 | | 141,783 | ||||||||||||||||||||||||
Change in fair value of interest rate cap, net of tax
|
| | | | | | 378 | 378 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total comprehensive income
|
| | | | | 141,783 | 378 | 142,161 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Distributions to preferred stockholders
|
| 7,736 | | | | (15,262 | ) | | (7,526 | ) | ||||||||||||||||||||||
Issuance of common stock, net
|
| | 64 | 117,103 | | | | 117,167 | ||||||||||||||||||||||||
Retirement of common stock
|
| | | (842 | ) | | | | (842 | ) | ||||||||||||||||||||||
Deferred tax valuation allowance reversal
|
| | | 2,643 | | | | 2,643 | ||||||||||||||||||||||||
Retirement of series B preferred stock
|
| (347 | ) | | | | | | (347 | ) | ||||||||||||||||||||||
Redemption of preferred stock
|
(100,000 | ) | (91,637 | ) | | | | | | (191,637 | ) | |||||||||||||||||||||
Conversion of subordinated notes
|
| | 34 | 39,512 | | | | 39,546 | ||||||||||||||||||||||||
Repurchase of common stock
|
| | (34 | ) | (65,588 | ) | | | | (65,622 | ) | |||||||||||||||||||||
Warrants exercised
|
| | 1 | | | | | 1 | ||||||||||||||||||||||||
State stockholder litigation settlement
|
| | 3 | 3,051 | | | | 3,054 | ||||||||||||||||||||||||
Amortization of deferred compensation, net of forfeitures
|
| (55 | ) | | (71 | ) | 1,720 | | | 1,594 | ||||||||||||||||||||||
Restricted stock grant
|
| | 1 | 1,594 | (1,595 | ) | | | | |||||||||||||||||||||||
Stock options exercised
|
| | 1 | 1,274 | | | | 1,275 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
BALANCE, December 31, 2003
|
$ | 7,500 | $ | 23,528 | $ | 350 | $ | 1,441,742 | $ | (1,479 | ) | $ | (695,590 | ) | $ | (586 | ) | $ | 775,465 | |||||||||||||
|
F - 7
Accumulated | ||||||||||||||||||||||||||||||||
Series A | Series B | Additional | Retained | Other | Total | |||||||||||||||||||||||||||
Preferred | Preferred | Common | Paid-In | Deferred | Earnings | Comprehensive | Stockholders | |||||||||||||||||||||||||
Stock | Stock | Stock | Capital | Compensation | (Deficit) | Income (Loss) | Equity | |||||||||||||||||||||||||
BALANCE, December 31, 2003
|
$ | 7,500 | $ | 23,528 | $ | 350 | $ | 1,441,742 | $ | (1,479 | ) | $ | (695,590 | ) | $ | (586 | ) | $ | 775,465 | |||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive income:
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 62,543 | | 62,543 | ||||||||||||||||||||||||
Change in fair value of interest rate cap, net of tax
|
| | | | | | 586 | 586 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total comprehensive income
|
| | | | | 62,543 | 586 | 63,129 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Distributions to preferred stockholders
|
| | | | | (1,462 | ) | | (1,462 | ) | ||||||||||||||||||||||
Income tax benefit of equity compensation
|
| | | 3,683 | | | | 3,683 | ||||||||||||||||||||||||
Redemption of preferred stock
|
(7,500 | ) | (23,528 | ) | | | | | | (31,028 | ) | |||||||||||||||||||||
Issuance of common stock
|
| | | 50 | | | | 50 | ||||||||||||||||||||||||
Amortization of deferred compensation, net of forfeitures
|
| | | (106 | ) | 1,318 | | | 1,212 | |||||||||||||||||||||||
Restricted stock grant
|
| | 1 | 1,574 | (1,575 | ) | | | | |||||||||||||||||||||||
Stock options exercised
|
| | 3 | 4,942 | | | | 4,945 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
BALANCE, December 31, 2004
|
$ | | $ | | $ | 354 | $ | 1,451,885 | $ | (1,736 | ) | $ | (634,509 | ) | $ | | $ | 815,994 | ||||||||||||||
|
F - 8
Accumulated | ||||||||||||||||||||||||||||||||
Series A | Series B | Additional | Retained | Other | Total | |||||||||||||||||||||||||||
Preferred | Preferred | Common | Paid-In | Deferred | Earnings | Comprehensive | Stockholders | |||||||||||||||||||||||||
Stock | Stock | Stock | Capital | Compensation | (Deficit) | Income (Loss) | Equity | |||||||||||||||||||||||||
BALANCE, December 31, 2004
|
$ | | $ | | $ | 354 | $ | 1,451,885 | $ | (1,736 | ) | $ | (634,509 | ) | $ | | $ | 815,994 | ||||||||||||||
|
||||||||||||||||||||||||||||||||
Comprehensive income :
|
||||||||||||||||||||||||||||||||
Net income
|
| | | | | 50,122 | | 50,122 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Total comprehensive income
|
| | | | | 50,122 | | 50,122 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
Conversion of subordinated notes
|
| | 34 | 29,944 | | | | 29,978 | ||||||||||||||||||||||||
Issuance of common stock
|
| | | 68 | | | | 68 | ||||||||||||||||||||||||
Retirement of common stock
|
| | | (33 | ) | | | | (33 | ) | ||||||||||||||||||||||
Amortization of deferred compensation, net of forfeitures
|
| | | (142 | ) | 3,169 | | | 3,027 | |||||||||||||||||||||||
Stock option compensation expense
|
| | | 989 | | | | 989 | ||||||||||||||||||||||||
Income tax benefit of equity compensation
|
| | | 6,900 | | | | 6,900 | ||||||||||||||||||||||||
Restricted stock grant
|
| | 2 | 6,994 | (6,996 | ) | | | | |||||||||||||||||||||||
Warrants exercised
|
| | 1 | 999 | | | | 1,000 | ||||||||||||||||||||||||
Stock options exercised
|
| | 6 | 8,580 | | | | 8,586 | ||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||
BALANCE, December 31, 2005
|
$ | | $ | | $ | 397 | $ | 1,506,184 | $ | (5,563 | ) | $ | (584,387 | ) | $ | | $ | 916,631 | ||||||||||||||
|
F - 9
F - 10
Land improvements
|
5 20 years | |
Buildings and improvements
|
5 50 years | |
Equipment
|
3 5 years | |
Office furniture and fixtures
|
5 years |
F - 11
F - 12
F - 13
December 31, | ||||||||||||||||
2005 | 2004 | |||||||||||||||
Carrying | Carrying | |||||||||||||||
Amount | Fair Value | Amount | Fair Value | |||||||||||||
Investment in direct financing lease
|
$ | 17,080 | $ | 21,926 | $ | 17,744 | $ | 22,623 | ||||||||
Note receivable from APM
|
$ | 5,428 | $ | 9,104 | $ | 6,078 | $ | 9,875 | ||||||||
Debt
|
$ | (975,636 | ) | $ | (987,026 | ) | $ | (1,002,295 | ) | $ | (1,061,566 | ) |
F - 14
F - 15
F - 16
For the Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
As Reported:
|
||||||||||||
Income from continuing operations and after
preferred stock distributions
|
$ | 50,564 | $ | 60,193 | $ | 125,727 | ||||||
Income (loss) from discontinued operations, net of taxes
|
(442 | ) | 888 | 794 | ||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 50,122 | $ | 61,081 | $ | 126,521 | ||||||
|
||||||||||||
|
||||||||||||
Pro Forma:
|
||||||||||||
Income from continuing operations and after
preferred stock distributions
|
$ | 42,519 | $ | 56,181 | $ | 119,319 | ||||||
Income (loss) from discontinued operations, net of taxes
|
(442 | ) | 888 | 794 | ||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 42,077 | $ | 57,069 | $ | 120,113 | ||||||
|
||||||||||||
|
||||||||||||
As Reported:
|
||||||||||||
Basic earnings (loss) per share:
|
||||||||||||
Income from continuing operations
|
$ | 1.31 | $ | 1.71 | $ | 3.90 | ||||||
Income (loss) from discontinued operations, net of taxes
|
(0.01 | ) | 0.03 | 0.02 | ||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 1.30 | $ | 1.74 | $ | 3.92 | ||||||
|
||||||||||||
|
||||||||||||
As Reported:
|
||||||||||||
Diluted earnings (loss) per share:
|
||||||||||||
Income from continuing operations
|
$ | 1.26 | $ | 1.53 | $ | 3.42 | ||||||
Income (loss) from discontinued operations, net of taxes
|
(0.01 | ) | 0.02 | 0.02 | ||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 1.25 | $ | 1.55 | $ | 3.44 | ||||||
|
||||||||||||
|
||||||||||||
Pro Forma:
|
||||||||||||
Basic earnings (loss) per share:
|
||||||||||||
Income from continuing operations
|
$ | 1.11 | $ | 1.60 | $ | 3.71 | ||||||
Income (loss) from discontinued operations, net of taxes
|
(0.01 | ) | 0.03 | 0.02 | ||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 1.10 | $ | 1.63 | $ | 3.73 | ||||||
|
||||||||||||
|
||||||||||||
Pro Forma:
|
||||||||||||
Diluted earnings (loss) per share:
|
||||||||||||
Income from continuing operations
|
$ | 1.06 | $ | 1.43 | $ | 3.25 | ||||||
Income (loss) from discontinued operations, net of taxes
|
(0.01 | ) | 0.02 | 0.02 | ||||||||
|
||||||||||||
Net income available to common stockholders
|
$ | 1.05 | $ | 1.45 | $ | 3.27 | ||||||
|
F - 17
1. | A modified prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123R for all share-based payments granted after the effective date and (b) based on the requirements of SFAS 123 for all awards granted to employees prior to the effective date of SFAS 123R that remain unvested on the effective date. | ||
2. | A modified retrospective method which includes the requirements of the modified prospective method described above, but also permits entities to restate based on the amounts previously recognized under SFAS 123 for purposes of pro forma disclosures either for (a) all prior periods presented or (b) prior interim periods of the year of adoption. |
F - 18
December 31, 2005 | December 31, 2004 | |||||||||||||||
Gross Carrying | Accumulated | Gross Carrying | Accumulated | |||||||||||||
Amount | Amortization | Amount | Amortization | |||||||||||||
Contract acquisition costs
|
$ | 873 | $ | (855 | ) | $ | 873 | $ | (839 | ) | ||||||
Customer list
|
765 | (328 | ) | 765 | (219 | ) | ||||||||||
Contract values
|
(35,688 | ) | 19,294 | (35,688 | ) | 16,759 | ||||||||||
|
||||||||||||||||
|
||||||||||||||||
Total
|
$ | (34,050 | ) | $ | 18,111 | $ | (34,050 | ) | $ | 15,701 | ||||||
|
2006
|
$ | 4,552 | ||
2007
|
4,552 | |||
2008
|
4,552 | |||
2009
|
3,095 | |||
2010
|
2,632 |
F - 19
December 31, | ||||||||
2005 | 2004 | |||||||
|
||||||||
Land and improvements
|
$ | 37,673 | $ | 36,165 | ||||
Buildings and improvements
|
1,810,706 | 1,734,833 | ||||||
Equipment
|
126,549 | 94,347 | ||||||
Office furniture and fixtures
|
24,386 | 23,302 | ||||||
Construction in progress
|
71,627 | 68,032 | ||||||
|
||||||||
|
2,070,941 | 1,956,679 | ||||||
Less: Accumulated depreciation
|
(360,147 | ) | (296,821 | ) | ||||
|
||||||||
|
||||||||
|
$ | 1,710,794 | $ | 1,659,858 | ||||
|
F - 20
F - 21
F - 22
2006
|
$ | 2,793 | ||
2007
|
2,793 | |||
2008
|
2,793 | |||
2009
|
2,793 | |||
2010
|
2,793 | |||
Thereafter
|
17,451 | |||
|
||||
Total minimum obligation
|
31,416 | |||
Less unearned interest income
|
(14,336 | ) | ||
Less current portion of direct financing lease
|
(758 | ) | ||
|
||||
Investment in direct financing lease
|
$ | 16,322 | ||
|
December 31, | ||||||||
2005 | 2004 | |||||||
Debt issuance costs, less accumulated amortization
of $8,539 and $9,773, respectively
|
$ | 16,138 | $ | 18,827 | ||||
Notes receivable, net
|
4,241 | 4,921 | ||||||
Cash surrender value of life insurance
|
1,540 | 1,376 | ||||||
Deposits
|
1,375 | 2,326 | ||||||
Customer list, less accumulated amortization of $328 and $219,
respectively
|
437 | 546 | ||||||
Contract acquisition costs, less accumulated amortization
of $855 and $839, respectively
|
18 | 34 | ||||||
Other
|
71 | 114 | ||||||
|
||||||||
|
$ | 23,820 | $ | 28,144 | ||||
|
December 31, | ||||||||
2005 | 2004 | |||||||
Trade accounts payable
|
$ | 37,993 | $ | 31,775 | ||||
Accrued salaries and wages
|
23,159 | 16,769 | ||||||
Accrued workers compensation and auto liability
|
26,756 | 27,168 | ||||||
Accrued litigation
|
13,186 | 16,594 | ||||||
Accrued employee medical insurance
|
6,860 | 7,212 | ||||||
Accrued property taxes
|
12,802 | 12,538 | ||||||
Accrued interest
|
13,814 | 11,745 | ||||||
Other
|
23,697 | 21,014 | ||||||
|
$ | 158,267 | $ | 144,815 |
F - 23
Record | Payment | Distribution Per | Return of | |||||||||||||||||
Declaration Date | Date | Date | Share | Ordinary Income | Capital | |||||||||||||||
12/11/02
|
12/31/02 | 01/15/03 | $ | 0.50 | 100.0 | % | 0.0 | % | ||||||||||||
03/11/03
|
03/31/03 | 04/15/03 | $ | 0.50 | 100.0 | % | 0.0 | % | ||||||||||||
06/20/03
|
06/30/03 | 07/15/03 | $ | 0.50 | 100.0 | % | 0.0 | % | ||||||||||||
09/05/03
|
09/30/03 | 10/15/03 | $ | 0.50 | 100.0 | % | 0.0 | % | ||||||||||||
12/08/03
|
12/31/03 | 01/15/04 | $ | 0.50 | 100.0 | % | 0.0 | % | ||||||||||||
02/19/04
|
03/19/04 | 03/19/04 | $ | 0.36 | 100.0 | % | 0.0 | % |
Fair Market | Cash | |||||||||||||||||||||||
Record | Payment | Value Per | Distributions | Return of | ||||||||||||||||||||
Declaration Date | Date | Date | Share | Per Share | Ordinary Income | Capital | ||||||||||||||||||
12/11/02
|
12/20/02 | 01/02/03 | $ | 24.73 | | 100.0 | % | 0.0 | % | |||||||||||||||
03/11/03
|
03/17/03 | 03/31/03 | $ | 24.83 | | 100.0 | % | 0.0 | % | |||||||||||||||
06/09/03
|
06/16/03 | 06/30/03 | $ | 25.45 | | 100.0 | % | 0.0 | % | |||||||||||||||
09/05/03
|
09/16/03 | 09/30/03 | $ | 25.37 | | 100.0 | % | 0.0 | % | |||||||||||||||
12/08/03
|
12/17/03 | 12/31/03 | $ | | $ | 0.7338 | 100.0 | % | 0.0 | % | ||||||||||||||
03/16/04
|
03/23/04 | 03/31/04 | $ | | $ | 0.7338 | 100.0 | % | 0.0 | % | ||||||||||||||
05/14/04
|
06/28/04 | 06/28/04 | $ | | $ | 0.7175 | 100.0 | % | 0.0 | % |
F - 24
December 31, | ||||||||
2005 | 2004 | |||||||
Senior Bank Credit Facility:
|
||||||||
Term Loan E Facility, with quarterly principal payments of varying amounts
with unpaid balance due in March 2008; interest payable periodically at
variable interest rates. The interest rate was 6.0% and 4.4% at
December 31, 2005 and 2004, respectively.
|
$ | 138,950 | $ | 270,135 | ||||
Revolving Loan, principal due at maturity in March 2006, interest payable
periodically at variable interest rates. The interest rate was 5.9% at
December 31, 2005.
|
10,000 | | ||||||
9.875% Senior Notes, principal due at maturity in May 2009; interest payable
semi-annually in May and November at 9.875%. These notes were paid off
in connection with a tender offer for the notes in March 2005.
|
| 250,000 | ||||||
7.5% Senior Notes, principal due at maturity in May 2011; interest payable
semi-annually in May and November at 7.5%.
|
250,000 | 250,000 | ||||||
7.5% Senior Notes, principal due at maturity in May 2011; interest payable
semi-annually in May and November at 7.5%. These notes were issued with a
$2.3 million premium, of which $1.5 million and $1.8 million was unamortized
at December 31, 2005 and 2004, respectively.
|
201,548 | 201,839 | ||||||
6.25% Senior Notes, principal due at maturity in March 2013; interest
payable semi-annually in March and September at 6.25%.
|
375,000 | | ||||||
4.0% Convertible Subordinated Notes, principal due at maturity in February
2007 with call provisions beginning in March 2005; interest payable
quarterly at 4.0%. These notes were converted into shares of common stock in
March 2005.
|
| 30,000 | ||||||
Other
|
138 | 321 | ||||||
|
||||||||
|
975,636 | 1,002,295 | ||||||
Less: Current portion of long-term debt
|
(11,836 | ) | (3,182 | ) | ||||
|
||||||||
|
$ | 963,800 | $ | 999,113 | ||||
|
F - 25
F - 26
F - 27
F - 28
F - 29
2006
|
$ | 11,538 | ||
2007
|
103,250 | |||
2008
|
34,300 | |||
2009
|
| |||
2010
|
| |||
Thereafter
|
825,000 | |||
|
||||
|
||||
Total principal payments
|
974,088 | |||
Unamortized bond premium
|
1,548 | |||
|
||||
|
||||
Total debt
|
$ | 975,636 | ||
|
F - 30
For the Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Current provision (benefit)
|
||||||||||||
Federal
|
$ | 363 | $ | 20,508 | $ | (4,603 | ) | |||||
State
|
(485 | ) | 2,286 | 1,492 | ||||||||
|
||||||||||||
|
(122 | ) | 22,794 | (3,111 | ) | |||||||
|
||||||||||||
|
||||||||||||
Deferred provision (benefit)
|
||||||||||||
Federal
|
27,286 | 16,666 | (44,191 | ) | ||||||||
State
|
(276 | ) | 2,054 | (5,050 | ) | |||||||
|
||||||||||||
|
27,010 | 18,720 | (49,241 | ) | ||||||||
|
||||||||||||
|
||||||||||||
Income tax provision (benefit)
|
$ | 26,888 | $ | 41,514 | $ | (52,352 | ) | |||||
|
F - 31
2005 | 2004 | |||||||
Current deferred tax assets:
|
||||||||
Asset reserves and liabilities not yet deductible for tax
|
$ | 21,053 | $ | 21,565 | ||||
Net operating loss and tax credit carryforwards
|
13,385 | 34,845 | ||||||
|
||||||||
Net current deferred tax assets
|
34,438 | 56,410 | ||||||
|
||||||||
|
||||||||
Current deferred tax liabilities:
|
||||||||
Other
|
(1,950 | ) | | |||||
|
||||||||
|
||||||||
Net total current deferred tax assets
|
$ | 32,488 | $ | 56,410 | ||||
|
||||||||
|
||||||||
Noncurrent deferred tax assets:
|
||||||||
Asset reserves and liabilities not yet deductible for tax
|
3,767 | 1,572 | ||||||
Net operating loss and tax credit carryforwards
|
31,114 | 23,740 | ||||||
Other
|
11,037 | 9,136 | ||||||
|
||||||||
Total noncurrent deferred tax assets
|
45,918 | 34,448 | ||||||
Less valuation allowance
|
(8,252 | ) | (6,457 | ) | ||||
|
||||||||
|
||||||||
Net noncurrent deferred tax assets
|
37,666 | 27,991 | ||||||
|
||||||||
|
||||||||
Noncurrent deferred tax liabilities:
|
||||||||
Book over tax basis of certain assets
|
(49,573 | ) | (41,718 | ) | ||||
Other
|
(180 | ) | (405 | ) | ||||
|
||||||||
Total noncurrent deferred tax liabilities
|
(49,753 | ) | (42,123 | ) | ||||
|
||||||||
|
||||||||
Net total noncurrent deferred tax liabilities
|
$ | (12,087 | ) | $ | (14,132 | ) | ||
|
F - 32
2005 | 2004 | 2003 | ||||||||||
Statutory federal rate
|
35.0 | % | 35.0 | % | 35.0 | % | ||||||
State taxes, net of federal tax benefit
|
0.7 | 4.0 | 4.0 | |||||||||
Permanent differences
|
1.9 | 3.2 | 4.9 | |||||||||
Change in valuation allowance
|
2.3 | 2.1 | (99.5 | ) | ||||||||
Adjustments to prior years tax returns
|
(3.2 | ) | (4.4 | ) | | |||||||
Other items, net
|
(2.0 | ) | 0.3 | (3.5 | ) | |||||||
|
||||||||||||
|
34.7 | % | 40.2 | % | (59.1 | )% | ||||||
|
F - 33
F - 34
F - 35
December 31, | ||||||||
ASSETS | 2005 | 2004 | ||||||
|
||||||||
Accounts receivable
|
$ | | $ | 2,365 | ||||
|
||||||||
Total current assets
|
| 2,365 | ||||||
|
||||||||
Property and equipment, net
|
| 152 | ||||||
|
||||||||
|
||||||||
Total assets
|
$ | | $ | 2,517 | ||||
|
||||||||
|
LIABILITIES | ||||||||
|
||||||||
Accounts payable and accrued expenses
|
$ | 1,774 | $ | 2,061 | ||||
|
||||||||
|
||||||||
Total current liabilities
|
$ | 1,774 | $ | 2,061 | ||||
|
F - 36
F - 37
F - 38
F - 39
Weighted | ||||||||
Number of | average exercise | |||||||
options | price per option | |||||||
|
||||||||
Outstanding at December 31, 2002
|
3,102 | $ | 20.86 | |||||
Granted
|
774 | $ | 17.29 | |||||
Cancelled
|
(84 | ) | $ | 19.74 | ||||
Exercised
|
(122 | ) | $ | 10.43 | ||||
|
||||||||
|
||||||||
Outstanding at December 31, 2003
|
3,670 | $ | 20.48 | |||||
Granted
|
696 | $ | 30.53 | |||||
Cancelled
|
(220 | ) | $ | 25.03 | ||||
Exercised
|
(346 | ) | $ | 14.28 | ||||
|
||||||||
|
||||||||
Outstanding at December 31, 2004
|
3,800 | $ | 22.63 | |||||
Granted
|
324 | $ | 38.93 | |||||
Cancelled
|
(131 | ) | $ | 31.15 | ||||
Exercised
|
(664 | ) | $ | 12.94 | ||||
|
||||||||
|
||||||||
Outstanding at December 31, 2005
|
3,329 | $ | 25.86 | |||||
|
2005 | 2004 | 2003 | ||||||||||
|
||||||||||||
Expected dividend yield
|
0.0 | % | 0.0 | % | 0.0 | % | ||||||
Expected stock price volatility
|
26.9 | % | 36.6 | % | 42.0 | % | ||||||
Risk-free interest rate
|
4.1 | % | 3.6 | % | 2.8 | % | ||||||
Expected life of options
|
6 years | 6 years | 6 years |
F - 40
16. | EARNINGS PER SHARE |
F - 41
17. | COMMITMENTS AND CONTINGENCIES |
F - 42
F - 43
F - 44
18. | SEGMENT REPORTING |
F - 45
For the Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Revenue:
|
||||||||||||
Owned and managed
|
$ | 840,800 | $ | 787,397 | $ | 732,465 | ||||||
Managed-only
|
333,051 | 315,633 | 252,394 | |||||||||
|
||||||||||||
Total management revenue
|
1,173,851 | 1,103,030 | 984,859 | |||||||||
|
||||||||||||
|
||||||||||||
Operating expenses:
|
||||||||||||
Owned and managed
|
598,786 | 563,058 | 523,202 | |||||||||
Managed-only
|
278,650 | 261,609 | 202,706 | |||||||||
|
||||||||||||
Total operating expenses
|
877,436 | 824,667 | 725,908 | |||||||||
|
||||||||||||
|
||||||||||||
Facility contribution:
|
||||||||||||
Owned and managed
|
242,014 | 224,339 | 209,263 | |||||||||
Managed-only
|
54,401 | 54,024 | 49,688 | |||||||||
|
||||||||||||
Total facility contribution
|
296,415 | 278,363 | 258,951 | |||||||||
|
||||||||||||
|
||||||||||||
Other revenue (expense):
|
||||||||||||
Rental and other revenue
|
18,789 | 23,357 | 22,748 | |||||||||
Other operating expense
|
(21,357 | ) | (25,699 | ) | (21,892 | ) | ||||||
General and administrative expense
|
(57,053 | ) | (48,186 | ) | (40,467 | ) | ||||||
Depreciation and amortization
|
(59,882 | ) | (54,445 | ) | (52,884 | ) | ||||||
|
||||||||||||
Operating income
|
$ | 176,912 | $ | 173,390 | $ | 166,456 | ||||||
|
For the Years Ended December 31, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Capital expenditures:
|
||||||||||||
Owned and managed
|
$ | 90,515 | $ | 84,691 | $ | 60,523 | ||||||
Managed-only
|
5,288 | 5,137 | 2,722 | |||||||||
Corporate and other
|
19,292 | 40,899 | 28,843 | |||||||||
Discontinued operations
|
| 44 | 107 | |||||||||
|
||||||||||||
Total capital expenditures
|
$ | 115,095 | $ | 130,771 | $ | 92,195 | ||||||
|
December 31, | ||||||||
2005 | 2004 | |||||||
Assets:
|
||||||||
Owned and managed
|
$ | 1,672,941 | $ | 1,672,463 | ||||
Managed-only
|
92,101 | 80,438 | ||||||
Corporate and other
|
321,271 | 267,660 | ||||||
Discontinued operations
|
| 2,517 | ||||||
|
||||||||
Total assets
|
$ | 2,086,313 | $ | 2,023,078 | ||||
|
19. | SUBSEQUENT EVENTS | |
During February 2006, the Company issued 161,256 shares of restricted common stock to the Companys employees, with an aggregate value of $6.9 million. Unless earlier vested under the terms of the restricted stock, 81,587 shares issued to officers and executive officers are subject to vesting over a three year period based upon satisfaction of certain performance criteria for the fiscal years ending December 31, 2006, 2007 and 2008. No more than one third of such shares may vest in the first performance period; however, the performance criteria are cumulative for the three year period. Unless earlier vested under the terms of the restricted stock, the remaining 79,669 shares of restricted stock issued to certain other employees of the Company vest during 2009. |
F - 46
20. | SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) | |
Selected quarterly financial information for each of the quarters in the years ended December 31, 2005 and 2004 is as follows (in thousands, except per share data): |
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2005 | 2005 | 2005 | 2005 | |||||||||||||
Revenue (1)
|
$ | 280,887 | $ | 290,189 | $ | 304,367 | $ | 317,197 | ||||||||
Operating income (1)
|
39,562 | 38,225 | 48,694 | 50,431 | ||||||||||||
Income (loss) from discontinued
operations, net of
taxes (1)
|
(620 | ) | 427 | | (249 | ) | ||||||||||
Net income (loss) available to common
stockholders
|
(8,939 | ) | 14,863 | 20,793 | 23,405 | |||||||||||
|
||||||||||||||||
Basic earnings (loss) per share:
|
||||||||||||||||
Net income (loss) available to common
stockholders
|
$ | (0.24 | ) | $ | 0.38 | $ | 0.53 | $ | 0.59 | |||||||
Diluted earnings (loss) per share:
|
||||||||||||||||
Net income (loss) available to common
stockholders
|
$ | (0.24 | ) | $ | 0.37 | $ | 0.52 | $ | 0.58 |
(1) | The amounts presented for the first two quarters of 2005 are not equal to the same amounts previously reported in Form 10-Q for each period as a result of discontinued operations. Below is a reconciliation to the amounts previously reported in Form 10-Q: |
March 31, | June 30, | |||||||
2005 | 2005 | |||||||
Total revenue previously reported
|
$ | 285,930 | $ | 295,827 | ||||
Discontinued operations
|
(5,043 | ) | (5,638 | ) | ||||
|
||||||||
Revised total revenue
|
$ | 280,887 | $ | 290,189 | ||||
|
||||||||
|
||||||||
Operating income previously reported
|
$ | 38,610 | $ | 38,868 | ||||
Discontinued operations
|
952 | (643 | ) | |||||
|
||||||||
Revised operating income
|
$ | 39,562 | $ | 38,225 | ||||
|
||||||||
|
||||||||
Income (loss) from discontinued
operations, net of
taxes
|
$ | | $ | | ||||
Additional discontinued operations
subsequent to
the respective reporting period
|
(620 | ) | 427 | |||||
|
||||||||
Revised income (loss) from discontinued
operations, net of taxes
|
$ | (620 | ) | $ | 427 | |||
|
F - 47
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2004 | 2004 | 2004 | 2004 | |||||||||||||
Revenue
|
$ | 271,187 | $ | 281,901 | $ | 284,804 | $ | 288,495 | ||||||||
Operating income
|
42,447 | 43,606 | 42,473 | 44,864 | ||||||||||||
Income tax expense
|
(9,894 | ) | (10,749 | ) | (8,769 | )(2) | (12,102 | )(3) | ||||||||
Income (loss) from discontinued operations,
net of
taxes
|
343 | 189 | 374 | (18 | ) | |||||||||||
Net income available to common stockholders
|
14,370 | 14,776 | 17,008 | 14,927 | ||||||||||||
|
||||||||||||||||
|
||||||||||||||||
Basic earnings per share:
|
||||||||||||||||
Net income available to common stockholders
|
$ | 0.41 | $ | 0.42 | $ | 0.49 | $ | 0.42 | ||||||||
Diluted earnings per share:
|
||||||||||||||||
Net income available to common stockholders
|
$ | 0.37 | $ | 0.38 | $ | 0.43 | $ | 0.38 |
(2) | Financial results for the third quarter of 2004 included income tax benefits netting $0.03 per diluted share primarily resulting from a change in estimated income taxes associated with certain financing transactions completed during 2003. | |
(3) | Financial results for the fourth quarter of 2004 included income tax charges netting $0.03 per diluted share related to an assessment by the Internal Revenue Service of taxes associated with prior refunds received by the Company during 2002 and 2003, partially offset by a net income tax benefit for the implementation of tax planning strategies that con- tributed to a reduction in the Companys effective tax rate in 2005. |
F - 48
EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of December 31, 1998, is made by and between CORRECTIONAL MANAGEMENT SERVICES CORPORATION, a Tennessee corporation (together with its successors, the "Company"), and CFE, INC., a Delaware corporation (together with its successors and assigns, "CFE").
W I T N E S S E T H :
WHEREAS, pursuant to that certain fee letter, dated as of December 28, 1998, among the Company, Corrections Corporation of America and General Electric Capital Corporation, the Company has agreed to issue and sell to CFE the Warrants to purchase shares of its Common Stock (capitalized terms used but not otherwise defined herein shall have the respective meanings given to such terms in Article I hereof); and
WHEREAS, the Company and CFE deem it to be in their respective best interests to enter into this Agreement to provide certain rights to CFE in connection with the Warrants and the Stock;
NOW, THEREFORE, to implement the foregoing and in consideration of the mutual terms, conditions and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.1 Defined Term. Capitalized terms used but not otherwise defined herein shall have the respective meanings given to such terms in the Credit Agreement. The following terms shall have the following meanings:
"Change of Control" means the occurrence of any of (i) an acquisition after the date hereof by an individual or legal entity or "group" (as described in Rule 13d-5(b)(l) promulgated under the Exchange Act), not affiliated with the Company for at least twelve months prior to December 31, 1998, of 25% or more of the outstanding securities of the Company, (ii) a sale or other disposition via a single transaction or series of transactions by the Company or any of its subsidiaries of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, (iii) the merger or consolidation of the Company with or into another entity, if the stockholders of the Company immediately before such merger or consolidation do not own, directly or indirectly, immediately following such merger or consolidation, more than 50% of the combined voting power of the resulting outstanding voting securities in substantially the same proportion as their pre-merger or pre-consolidation ownership, or (iv) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (i), (ii) or (iii).
"Common Stock" means the Company's Class A Common Stock, $0.01 par value per share.
"Credit Agreement" means that certain Credit Agreement, dated as of the date hereof, among the Company, the other Persons signatory thereto as Credit Parties, the Persons signatory thereto as Lenders and General Electric Capital Corporation, as agent for Lenders, as such agreement may from time to time be amended, modified or supplemented in accordance with its terms.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal statute then in effect.
"Initial Public Offering" means the closing of a firm commitment underwritten public offering of the Common Stock or any other class of the Company's Stock pursuant to an effective registration statement under the Securities Act.
"Majority Holders" means on any date the holders of a majority of the Registrable Securities on such date.
"Public Offering" means any primary or secondary public offering of the Common Stock or any other class of the Company's Stock pursuant to an effective registration statement under the Securities Act, other than pursuant to a registration statement on Form S-4 or Form S-8 or any successor or similar form.
"Registrable Securities" shall mean (a) all shares of Common Stock issued or issuable upon the exercise of any Warrant and (b) any securities issued or issuable by the Company with respect to shares of Common Stock or other Stock referred to in the foregoing clause (a) by way of a stock dividend or stock split or in connection with a combination or subdivision of shares, reclassification, merger, consolidation or other reorganization of the Company; provided, however, that as to any particular Registrable Securities that have been issued, such securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement, (ii) they shall have been distributed to the public pursuant to Rule 144, (iii) they shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer or disposition of them shall not require their registration or qualification under the Securities Act or any similar state law then in force, or (iv) they shall have ceased to be outstanding. For the purposes of Article II hereof, the holder of any Warrant or other Stock referred to in clause (a) of the preceding sentence shall be deemed to be a holder of the Registrable Securities issuable upon exercise. exchange or conversion of such Warrant or other Stock, and such Registrable Securities shall be deemed to be issued and outstanding.
"Registration Expenses" shall mean any and all expenses incident to the Company's performance of or compliance with Article II hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, listing fees, fees and disbursements of legal counsel for the Company, fees and disbursements of legal counsel for the holders of Registrable Securities, Blue Sky fees and expenses (including the reasonable fees and
disbursements of underwriters' counsel in connection with Blue Sky qualifications and filings), fees and expenses of the transfer agent and registrar for the Registrable Securities and the fees and expenses of any special audits and/or "cold comfort" letters required by or incident to such performance and compliance, but excluding underwriting discounts and commissions and applicable transfer and documentary stamp taxes, if any, which shall be borne by the seller of the securities in all cases.
"Rule 144" means Rule 144 under the Securities Act, as such rule may be amended from time to time.
"SEC" means the United States Securities and Exchange Commission, and any successor agency or governmental body.
"Securities Act" means the Securities Act of 1933, as amended, or any similar federal statute then in effect.
"Stock" means any capital stock of the Company or other securities convertible into or exchangeable therefor, including warrants, options or other rights to acquire capital stock or any interest therein.
"Underwritten Offering" means any public offering of securities distributed by means of a firm commitment underwriting.
"Warrants" means the Warrants, dated December 31, 1998, issued by the Company to CFE to purchase shares of Common Stock of the Company and any other warrants of like tenor issued in substitution or exchange for any thereof.
Section 1.2 Other Definitional Provisions. The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms, and words of the masculine gender shall mean and include correlative words of the feminine and neuter genders. The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision. References herein to any Section or subsection are to the corresponding Section or subsection to this Agreement unless otherwise specified. Any headings preceding the texts of the several Sections and subsections of this Agreement are solely for convenience of reference and shall not constitute a part of this Agreement nor in any way define, limit or extend the scope or otherwise affect the meaning thereof.
ARTICLE II.
REGISTRATION RIGHTS
Section 2.1 Demand Registration Rights. (a) Subject to the terms and conditions set forth herein, at any time, and from time to time, after the earlier of (i) the date on which the Initial Public Offering has been declared effective by the SEC, (ii) December 31, 2001, (iii) a Change of Control of the Company and (iv) the Termination Date, the Majority Holders may request (such requesting holders are referred to herein as the "Requesting Holders") that the Company effect the registration under the Securities Act of all or part of such holders'
Registrable Securities on Form S-1 or any similar long-form registration ("Long Form Registration") or, if available, on Form S-2 or S-3 or any similar short-form registration ("Short Form Registration") (all Long Form Registrations and Short Form Registrations requested pursuant to this Section 2.1(a) are referred to herein as "Demand Registrations"). Each such request for registrations shall specify the approximate number of Registrable Securities requested to be registered, and may at the election of the Requesting Holders specify the intended method or methods of disposition thereof (which may include, without limitation, a "shelf" offering pursuant to Rule 415 under the Securities Act, or an Underwritten Offering). Within 10 days after receipt of such request, the Company will give written notice of such requested registration to all other holders of Registrable Securities, and, subject to the provisions of Section 2.1(e) hereof, will include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 20 days after the receipt of the Company's notice; provided, however, that the Company shall not be obligated to file a registration statement relating to any Demand Registration under this Section 2.1(a) within a period of 180 days after the effective date of any registration statement filed by the Company with respect to which the holder of the Warrants (or shares of Common Stock issued upon exercise thereof) shall have been afforded the opportunity to register all of its Registrable Securities in accordance with the provisions of Section 2.2 hereof.
(b) The holders of Registrable Securities will be entitled to request one Long Form Registration and two Short Form Registrations. Demand Registrations will be Short Form Registrations whenever the Company is permitted to use any applicable short form. Once the Company has become subject to the reporting requirements of the Exchange Act, the Company will use its best efforts to make Short Form Registrations available for the sale of Registrable Securities. The Company will pay all Registration Expenses incurred in connection with any Demand Registration. A registration will not count as the permitted Long Form Registration unless and until it has become effective, and unless the Requesting Holders shall have been able to register and sell at least 75% of the Registrable Securities initially requested to be registered pursuant thereto; provided that in any event the Company will pay all Registration Expenses in connection with any registration initiated as a Demand Registration whether or not it has become effective.
(c) A registration requested pursuant to this Section 2.1 will not be deemed to have been effected unless it has become effective under the Securities Act; provided that if after a registration has become so effective, the offering of Registrable Securities pursuant to such registration is terminated, suspended or interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court, such registration will be deemed not to have been effected.
(d) If the Requesting Holders so elect, the offering of Registrable Securities pursuant to any Demand Registration will be an Underwritten Offering. In the case of any Demand Registration which involves an Underwritten Offering, the Company shall have the right to select the investment banker (or investment bankers) that shall manage the offering (collectively. the "managing underwriter"), subject to the consent of the holders of a majority of the Registrable Securities being so registered which consent shall not be unreasonably withheld.
(e) Except with the prior written consent of the Requesting Holders, the Company will include in a Demand Registration only (i) Registrable Securities, (ii) authorized but unissued or treasury shares of Common Stock which the Company desires to issue and sell ("Company Securities"), and (iii) other outstanding shares of Common Stock which the Company shall have been requested to register ("Other Securities"); provided that if a Demand Registration involves an Underwritten Offering and the managing underwriter advises the Company that, in its opinion, the number of securities proposed to be included in such offering exceeds the number of securities which can be sold therein without adversely affecting the marketability of the offering, then the Company will promptly so advise each holder of Registrable Securities that has requested registration, and will include in such registration: first, Registrable Securities requested to be so included by such holders, allocated pro rata among such holders based on the number of Registrable Securities with respect to which each such holder has requested registration; and second, Company Securities which the Company desires to include in such registration; and third, Other Securities requested to be included in such registrations, allocated pro rata among the holders thereof based on the number of such Other Securities with respect to which such holder has requested registration; until the aggregate number of securities included in such Demand Registration is equal to the number thereof that, in the opinion of such managing underwriter, can be sold without adversely affecting the marketability thereof.
Section 2.2 Piggyback Registration Rights. (a) If the Company at any
time proposes to register under the Securities Act any shares of its Common
Stock now or hereafter authorized, other than a registration on Form S-4 or S-8
or any successor form and other than pursuant to a registration under Section
2.1 hereof, whether for sale for its own account or for the account of any other
selling stockholder, on a form and in a manner that would permit registration of
Registrable Securities for sale to the public under the Securities Act, it will
give written notice to all the holders of Registrable Securities promptly, and
in any event no later than 30 days (10 days if the registration is a Short Form
Registration) before the initial filing with the SEC of a registration
statement, of its intention to do so, describing such securities and specifying
the form and manner and the other relevant facts involved in such proposed
registration (including, without limitation (i) whether or not such registration
will be in connection with an underwritten offering of securities and, if so,
the identity of the managing underwriter and whether such offering will be
pursuant to a "best efforts" or "firm commitment" underwriting, (ii) the price
at which such securities are reasonably expected to be sold to the public, and
(iii) the amount of the underwriting discount reasonably expected to be incurred
in connection therewith). Upon the written request of any such holder delivered
to the Company within 20 days (10 days if the registration is a Short Form
Registration) after the receipt of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by such holder and the
intended method of disposition thereon), the Company will (subject to the
provisions of Section 2.2(c) hereof) include in such registration all of the
Registrable Securities that the Company has been so requested to register;
provided, however, that if, at any time after giving such written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
shall determine for any reason not to proceed with such registration, the
Company may at its election give written notice of such determination to each
holder of Registrable Securities who made a request as hereinabove provided and
thereupon the Company shall be relieved of its registration obligations (but not
from its obligation to pay Registration Expenses in connection therewith). No
registration
effected under this Section. 2.2 shall relieve the Company of its obligation to effect Demand Registrations under Section 2.1 hereof.
(b) The Registration Expenses incurred in connection with each registration of Registrable Securities requested pursuant to this Section 2.2 shall be paid by the Company.
(c) If a registration of Other Securities pursuant to this Section 2.2 involves an Underwritten Offering and the managing underwriter advises the Company that, in its opinion, the number of securities proposed to be included in such offering exceeds the number of securities which can be sold therein without adversely affecting the marketability of the offering, then the Company will promptly so advise each holder of Registrable Securities that has requested registration, and will include in such registration: first, Other Securities requested to be so included by such holders, allocated pro rata among such holders based on the number of Other Securities with respect to which each such holder has requested registration; and second, Company Securities which the Company desires to include in such registration; and third, Registrable Securities requested to be included in such registrations, allocated pro rata among the holders thereof based on the number of such Registrable Securities with respect to which such holder has requested registration; until the aggregate number of securities included in such registration is equal to the number thereof that, in the opinion of such managing underwriter, can be sold without adversely affecting the marketability thereof.
(d) If a registration of Company Securities pursuant to this
Section 2.2 involves an Underwritten Offering and the managing underwriter
advises the Company that, in its opinion, the number of securities proposed to
be included in such offering exceeds the number of securities which can be sold
therein without adversely affecting the marketability of the offering, then the
Company will promptly so advise each holder of Registrable Securities that has
requested registration, and will include in such registration: first, Company
Securities which the Company desires to include in such registration; and
second, Registrable Securities and Other Securities requested to be included
therein, allocated pro rata among the holders of such Registrable Securities or
Other Securities, as the case may be, based on the number of Registrable
Securities or Other Securities with respect to which each such holder has
requested registration, in each case until the aggregate number of securities
included in such registration is equal to the number thereof that, in the
opinion of such managing underwriter, can be sold without adversely affecting
the marketability thereof.
Section 2.3 Registration Procedures. (a) Whenever any holders of Registrable Securities have requested that any Registrable Securities be registered pursuant to Section 2.1 or 2.2 hereof (subject to the applicable terms and conditions contained therein), the Company will use its best efforts to effect the registration of such securities under the Securities Act and the sale thereof in accordance with the intended method of disposition thereof, and in connection therewith the Company will, as expeditiously as possible:
(i) prepare and, in any event within 90 days after the end of the period within which requests for registration may be given to the Company, file with the SEC a registration statement with respect to such Registrable Securities and cause such registration statement to become and remain effective until the earlier of (A) six months or, if such registration statement relates to an Underwritten Offering, such longer period
as in the opinion of counsel for the underwriters a prospectus is required by law to be delivered in connection with sales of Registrable Securities by an underwriter or dealer, or (B) such shorter period as is required to complete the distribution of all of the securities covered by such registration statement (but in any event not before the expiration of any longer period required under the Securities Act);
(ii) prepare and file with the SEC such amendments (including post-effective amendments) and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement during such period in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement;
(iii) prior to filing with the SEC any such registration statement, prospectus, or amendment or supplement thereto, furnish copies thereof to counsel for the sellers of Registrable Securities under such registration statement, which documents will be subject to review by such counsel;
(iv) furnish to each seller of Registrable Securities covered by the registration statement and to each underwriter, if any, of such Registrable Securities, such number of copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as such seller may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such seller;
(v) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under
such other securities or Blue Sky laws of such jurisdictions as each
seller shall reasonably request, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
seller to consummate the disposition of the Registrable Securities
owned by such seller in such jurisdictions, except that the Company
shall not be requited (A) to qualify to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
Section 2.3(a), it is not then so qualified, (B) to subject itself to
taxation in any such jurisdiction, or (C) to take any action which
would subject it to service of process in any such jurisdiction where
it is not then so subject;
(vi) use its best efforts to cause such Registrable Securities covered by such registration statement to be registered or qualified with or approved by such other governmental agencies or authorities (including, without limitation, state securities commissions) as may be necessary to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities;
(vii) immediately notify each seller of Registrable Securities covered by such registration statement, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, if the Company becomes aware that the prospectus
included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and, at the request of any such seller, deliver a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing;
(viii) cause all Registrable Securities covered by the registration statement to be listed on each securities exchange on which similar securities issued by the Company are then listed or, if not so listed, to be listed on NASDAQ or such other national securities exchange as the managing underwriter of such offering may designate;
(ix) provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;
(x) enter into such customary agreements (including underwriting agreements in customary form) and take all such other actions as the holders of a majority of the Registrable Securities being sold or the underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities (including participating in "road shows" and engaging in other customary marketing efforts);
(xi) make available for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;
(xii) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC and make generally available to its security holders, in each case as soon as practicable but in no event later than 45 days after the close of the period covered thereby (or 90 days in case the period covered corresponds to a fiscal year of the Company), an earnings statement of the Company which will satisfy the provisions of Section 11(a) of the Securities Act;
(xiii) immediately notify each seller of Registrable Securities covered by such registration statement in the event of the issuance of any stop order suspending the effectiveness of a registration statement, or of any order suspending or preventing the use of any related prospectus or suspending the qualification of any Registrable Securities included in such registration statement for sale in any jurisdiction, and use its best efforts promptly to obtain the withdrawal of such order;
(xiv) obtain and furnish a "cold comfort" letter, dated the effective date of such registration statement (and, if such registration involves an Underwritten Offering, dated the date of the closing under the underwriting agreement), signed by the Company's independent public accountants, in customary form and covering such matters as are customarily covered by comfort letters by independent public accountants in such public offerings and such other financial matters as the holders of a majority of the Registrable Securities being sold may reasonably request; and
(xv) furnish a legal opinion of the Company's counsel, dated the effective date of such registration statement (and, if such registration involves an Underwritten Offering, dated the date of the closing under the underwriting agreement), with respect to the registration statement, each amendment and supplement thereto, the prospectus included therein (including the preliminary prospectus) and other documents relating thereto, in customary form and covering such matters as are customarily covered by legal opinions of issuers' counsel in such public offerings and such other legal matters as the holders of a majority of the Registrable Securities being sold may reasonably request.
(b) It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Section 2.3 in respect of Registrable Securities that the holders requesting registration thereof shall furnish to the Company such information regarding the Registrable Securities held by such holder and the intended method of disposition thereof as the Company shall reasonably request and as shall be required in connection with the action taken by the Company; provided, however, that the failure of any holder of Registrable Securities to furnish such information shall not affect the obligations of the Company pursuant to this Section 2.3 with respect to any holder of Registrable Securities who furnishes such information to the Company. Notwithstanding any provision to the contrary contained herein, no holder of Registrable Securities shall be required to furnish any information or make any representations or warranties to the Company or the underwriters other than representations and warranties contained in a writing furnished by such holder expressly for use in the registration statement to be filed in connection with such registration solely with regard to such holder's identity, its ownership of securities of the Company, the class and number of such securities it intends to include in such offering, its intended method of distribution, other information pertinent to such holder in its capacity as a selling holder, and any other information with respect to such holder required by law to be disclosed in such registration statement.
(c) If a registration pursuant to Section 2.1 or 2.2 involves an Underwritten Offering:
(i) The right of any holder of Registrable Securities to such registration shall be conditioned upon such holder's participation in such underwriting and the inclusion of such holder's Registrable Securities in the underwriting to the extent provided herein. The holders of Registrable Securities to be distributed by the underwriters thereof shall be parties to the underwriting agreement between the Company and such underwriters and may, at their option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such underwriters shall also be made to and for the benefit of
such holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such underwriters under such underwriting agreement be conditions precedent to the obligations of such holders of Registrable Securities. No such holder of Registrable Securities shall be required to make any representations or warranties to, or agree to any indemnities or contribution provisions with, the Company or the underwriters other than representations, warranties, indemnities and contribution provisions with respect to information required to be furnished by such holder in writing pursuant to subsection (b) of this Section 2.3.
(ii) Each holder of Registrable Securities included in such registration agrees not to sell, grant any option to purchase, acquire any option to sell, make any short sale of or otherwise dispose of or reduce its investment risk in any securities of the Company (other than as part of such Underwritten Offering), without the consent of the managing underwriter, for a period of 180 days, with respect to the Initial Public Offering, or a period of 30 days in all other cases (or such lesser number as the managing underwriter shall designate) after the effective date of such registration. At the request of the managing underwriter, each such holder of Registrable Securities shall execute a separate agreement with such managing underwriter to the foregoing effect.
(iii) The Company agrees, if so required by the managing underwriter, not to effect any sale or distribution any of its equity or debt securities, as the case may be, or securities convertible into or exchangeable or exercisable for any of such equity or debt securities, as the case may be, (other than as part of such Underwritten Offering) for a period of 180 days, with respect to the Initial Public Offering, or a period of 30 days in all other cases after the effective date of such registration, except in connection with a stock option plan, stock purchase plan, dividend reinvestment plan, savings or similar plan.
(iv) Any holder of Registrable Securities requesting to be included in such registration may elect, in writing, prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration.
Section 2.4 Sale of Warrants to Underwriters. In the case of any offering subject to the provisions of Section 2.1 or 2.2 hereof which is an Underwritten Offering, in lieu of exercising any Warrant prior to or simultaneously with the filing or the effectiveness of any registration statement filed in connection therewith, the holder of such Warrant may sell such Warrant to the underwriter or underwriters of the offering being registered upon the undertaking of such underwriter or underwriters to exercise such Warrant before making any distribution pursuant to such registration statement and to include the Shares issued upon such exercise among the securities being offered pursuant to such registration statement. The Company agrees to cause such Shares to be included among the securities being offered pursuant to such registration statement to be issued within such time as will permit such underwriter or underwriters to make and complete the distribution contemplated by the underwriting.
Section 2.5 Indemnification. (a) In the event of any registration of any securities under the Securities Act pursuant to Section 2.1 or 2.2 hereof, the Company will, and it hereby
agrees to, indemnify and hold harmless, to the extent permitted by law, each seller of any Registrable Securities covered by such registration statement, its directors, officers, general and limited partners, employees, agents and representatives (and directors and officers thereof and, if such seller is a portfolio or investment fund, its investment advisors or agents), each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such seller or any such underwriter within the meaning of Section 15 of the Securities Act. as follows:
(i) against any and all loss, liability, claim, damage, attorneys' fee or expense whatsoever arising out of or based upon an untrue statement or alleged untrue statement of a material fact contained in any registration statement (or any amendment or supplement thereto), including all documents incorporated therein by reference, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of an untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus or prospectus (or any amendment or supplement thereto) or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein not misleading;
(ii) against any and all loss, liability, claim, damage and expense whatsoever to the extent of the aggregate amount paid in settlement (a "Settlement Payment") of any litigation, of investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, if such settlement is effected with the written consent of the Company; and
(iii) against any and all expense (other than any Settlement Payment) reasonably incurred by them in connection with investigating, preparing or defending against any litigation, or investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under clauses (i) or (ii) above;
provided, however, that this indemnity does not apply to any loss, liability,
claim, damage or expense to the extent arising out of an untrue statement or
omission made in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such seller or underwriter
expressly for use in the preparation of any registration statement (or any
amendment thereto) or any preliminary prospectus or prospectus (or any amendment
or supplement thereto); and provided, further, that the Company will not be
liable to any Person who participates as an underwriter in the offering or sale
of Registrable Securities (or, if such offering and sale are not effected by or
through an underwriter, then such seller) or any other Person, if any, who
controls such underwriter (or seller, as the case may be) within the meaning of
Section 15 of the Securities Act, under the indemnity agreement in this Section
2.5(a) with respect to any preliminary prospectus or final prospectus or final
prospectus as amended or supplemented, as the case may be, to the extent that
any such loss, claim, damage or liability of such underwriter or controlling
Person results from the fact that such underwriter (or seller, as the case may
be) sold Registrable Securities to a Person to whom there was not sent or given,
at
or prior to the written confirmation of such sale, a copy of the final prospectus or of the final prospectus as then amended or supplemented, whichever is most recent, if the Company has previously furnished copies thereof to such underwriter (or seller, as the case may be). Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such seller or any such director, officer, general or limited partner, investment advisor or agent, underwriter or controlling Person and shall survive the transfer of such securities by such seller.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 2.1 or 2.2 hereof that the Company shall have received an undertaking
reasonably satisfactory to it from the prospective seller of such Registrable
Securities to indemnify and hold harmless (in the same manner and to the same
extent as set forth in Section 2.5(a) hereof) the Company, the underwriters, if
any, each Person who controls the Company or any such underwriter (within the
meaning of Section 15 of the Securities Act) and their respective officers,
directors, partners, employees, agents and representatives, with respect to any
statement in or omission from such registration statement, any preliminary,
final or summary prospectus contained therein, or any amendment or supplement,
if such statement or alleged statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller specifically for use in the preparation
of such registration statement, preliminary, final or summary prospectus or
amendment or supplement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, the
underwriters, or any such director, officer, partner, employee, agent,
representative or controlling Person and shall survive the transfer of such
securities by such seller. The obligations of the Company and such seller
pursuant to this Section 2.5 are to be several and not joint; provided, however,
that, with respect to each claim pursuant to this Section 2.5, the Company shall
be liable for the full amount of such claim, and each such seller's liability
under this Section 2.5 shall be limited to an amount equal to the net proceeds
(after deducting the underwriters' discount and expenses) received by such
seller from the sale of Registrable Securities by it pursuant to such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder of
written notice of the commencement of any action or proceeding involving a claim
referred to in this Section 2.5, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to such indemnifying party of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 2.5, except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any such action is brought
against an indemnified party, unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnifying parry will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof.
(d) The Company and each seller of Registrable Securities shall provide for the foregoing indemnities (with appropriate modifications) in any underwriting agreement with respect to any required registration or other qualification of securities under any federal or state law or regulation of any governmental authority.
Section 2.6 Contribution. In order to provide for just and equitable
contribution in circumstances under which the indemnity contemplated by Section
2.5 hereof is for any reason not available, the parties required to indemnify by
the terms thereof shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity agreement
incurred by the Company, any seller of Registrable Securities and one or more of
the underwriters, except to the extent that contribution is not permitted under
Section 11(f) of the Securities Act. In determining the amounts which the
respective parties shall contribute, there shall be considered the relative
benefits received by each party from the offering of the Registrable Securities
(taking into account the portion of the proceeds of the offering realized by
each), the parties' relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the opportunity to correct
and prevent any statement or omission and any other equitable considerations
appropriate under the circumstances. The Company, each such seller and the
underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
underwriters were treated as one entity for such purpose) or for the
underwriters' portion of such contribution to exceed the percentage that the
underwriting discount bears to the initial public offering price of the
Registrable Securities. For purposes of this Section 2.6; each Person, if any,
who controls an underwriter within the meaning of Section 15 of the Securities
Act shall have the same rights to contribution as such underwriter, and each
director and each officer of the Company who signed the registration statement,
and each Person, if any, who controls the Company or a seller of Registrable
Securities shall have the same rights to contribution as the Company or a seller
of Registrable securities, as the case may be. Notwithstanding the foregoing, no
seller of Registrable Securities shall be required to contribute any amount in
excess of the amount such seller would have been required to pay to an
indemnified party if the indemnity under Section 2.5 hereof were available.
Section 2.7 Current Public Information. At all times after the Company has filed a registration statement with the SEC pursuant to the requirements of either the Securities Act or the Exchange Act, and as long as any Warrant shall remain outstanding or the holders thereof shall hold any Registrable Securities, the Company will file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and will take such further action as any holder or holders of Registrable Securities may reasonably request, all to the extent required to enable such holders to sell Registrable Securities pursuant to Rule 144 under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC.
Section 2.8 Survival. The provisions of Sections 2.1 through 2.7 hereof, inclusive, shall survive the exercise of the Warrants with respect to all Shares issued upon exercise thereof. Without limiting the generality of the foregoing, in the event that any Warrant shall expire after being exercised in part, the provisions of such Sections shall survive such expiration with respect to all Shares issued upon the exercise thereof prior to such expiration.
Section 2.9 Other Registration Rights. (a) The Company represents and warrants to CFE that, other than as provided herein and in that certain Registration Rights Agreement, dated as of December 30, 1998, by and among Sodexho Alliance, S.A., Baron Asset Fund on behalf of the Barron Asset Fund Series and the Company, there are no agreements, understandings or commitments, oral or written, between the Company and the holders of any of its securities pursuant to which such holders have a right to require the Company to register or qualify any of its securities under the Securities Act or any applicable state securities laws.
(b) Except for the rights granted herein and the rights described in Section 2.9(a) above as in effect on the date hereof, without the prior written consent of the Majority Holders, the Company will not grant to any Person registration rights superior to those granted to the holders of the Registrable Securities hereunder.
ARTICLE III.
MISCELLANEOUS
Section 3.1 Term of Agreement. This Agreement shall terminate (i) upon written consent to such termination by each of the Company and the Majority Holders, and (ii) on December 31, 2008.
Section 3.2 After Acquired Stock. All Stock issued to or acquired by CFE following the date of this Agreement will be subject to the terms and provisions of this Agreement as if such after-acquired Stock was outstanding on the date hereof.
Section 3.3 Notices. Any notice, request, instruction or other document required or permitted to be given hereunder by any party hereto to another party hereto will be in writing and will be given to such party by certified mail at its address set forth below:
If to CFE: c/o General Electric Capital Corporation 10 South LaSalle Street, Suite 2700 Chicago, IL 60603 Attention: Account Manager Telecopy No. (312) 419-5992 If to Company: Correctional Management Services Corporation 10 Burton Hills Blvd. Nashville, TN 37215 Attention: Darrell K. Massengale Telecopy No.: (615) 263-3170 |
or, in the case of any transferee of any holder of Registrable Securities, to the address of such transferee specified by it upon notice given in accordance with the terms hereof, or to such other address as the party to whom notice is to be given may provide in a written notice to the party giving such notice, a copy of which written notice will be on file with the Secretary of the Company. Each such notice, request or other communications will be effective (a) if given by certified mail 96 hours after such communication is deposited in the mails with certified postage
prepaid addressed as aforesaid, (b) one Business Day after being furnished to a nationally recognized overnight courier for next Business Day delivery, and (c) on the date sent if sent by electronic facsimile transmission, receipt confirmed.
Section 3.4 Specific Performance. In addition to any other remedy provided at law or equity, the parties hereto shall be entitled to specific performance of this Agreement.
Section 3.5 Assignment. This Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties hereto; provided, that the Company may not assign its obligations hereunder without the prior written consent of the Majority Holders; provided, further that if any transferee of any holder of Registrable Securities shall acquire any Registrable Securities in any manner, whether by operation of law or otherwise, such transferee by taking and holding such Registrable Securities, shall be entitled to the benefits of and be deemed to be bound by this Agreement.
Section 3.6 Choice of Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the law of the State of New York. Each party hereto hereby submits to the jurisdiction of the United States District Court and of any state court sitting in the State of New York (and of the appropriate appellate courts) for the purposes of all legal proceedings arising out of or relating to this Agreement and irrevocably waives, to the fullest extent permitted by applicable law, any objection to venue laid therein. Process in any such proceeding may be served on such party, and any judgment thereon may be enforced against such party, anywhere in the world, whether within or without the State of New York. Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in respect of any matter directly or indirectly arising out of or otherwise relating to this Agreement.
Section 3.7 Amendments; Waivers. (a) No failure or delay on the part of any party in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and net exclusive of any rights or remedies provided by law.
(b) Neither this Agreement nor any term or provision hereof may be amended or waived except by an instrument in writing signed by the Majority Holders and to the extent the rights, duties or obligations of the Company are modified or supplemented thereby, the Company.
Section 3.8 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions, or of such provision in any other jurisdiction, shall not in any way be affected or impaired thereby.
Section 3.9 Entire Agreement. This Agreement and the Warrant contain the entire understanding of the parties hereto with respect to the subject matter hereof and supersede all
prior agreements, discussions and understandings among such parties with respect to such subject matter.
Section 3.10 Further Assurances. Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. Neither the Company nor any Holder shall voluntarily undertake any course of action inconsistent with satisfaction of the requirements applicable to them set forth in this Agreement and each shall promptly do all such acts and take all such measures as may be appropriate to enable them to perform as early as practicable the obligations herein and therein required to be performed by them.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be executed and delivered by their duly authorized officers as of the date first above written.
CORRECTIONAL MANAGEMENT SERVICES CORPORATION
By: /s/ Doctor R. Crants ------------------------------------ Name: Doctor R. Crants ------------------------------------ Title: Chief Executive Officer ------------------------------------ |
CFE, INC.
By: /s/ John Hatherly ------------------------------------ Name: John Hatherly ------------------------------------ Title: Duly Authorized Signatory ------------------------------------ |
EXHIBIT 10.15
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") is made this __ day of ________, 20__, by and between CORRECTIONS CORPORATION OF AMERICA, a Maryland corporation (the "Company"), and _________ (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Amended and Restated Corrections Corporation of America 2000 Stock Incentive Plan (the "Plan"), which authorizes the Company to grant non-qualified stock options ("Options") to key employees of the Company and/or its affiliates; and
WHEREAS, the Company and Optionee wish to confirm the terms and conditions of an Option granted to Optionee on __________, 20___ (the "Date of Grant").
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed between the parties hereto as follows:
1. Definitions. Except as provided in this Agreement, or unless the context otherwise requires, the terms used herein shall have the same meaning as in the Plan.
2. Grant of Option. Upon and subject to the terms, restrictions, limitations and conditions stated herein, the Company hereby grants to Optionee an Option to purchase up to _________ shares of the Company's Common Stock (collectively, the "Option Shares").
3. Option Price. The purchase price per Option Share shall be $______ (the "Option Price")
4. Exercise; Vesting; Forfeiture.
(i) Except as otherwise provided herein, Optionee shall have the
right to exercise the Option, if and to the extent the Option has vested in
accordance with subparagraphs (iii) and (iv) below, at any time during the
ten-year period commencing on the Date of Grant; provided, however, that except
as otherwise provided in subparagraph (iv) below, Optionee may not exercise the
Option unless Optionee is on the date of exercise and continuously after the
Date of Grant an employee of: (a) the Company; (b) an Affiliate Corporation; or
(c) a corporation issuing or assuming the Option in a Transaction to which Code
Section 424 applies (or a Subsidiary Corporation of such corporation) ((a), (b)
and (c) known collectively, herein, as the "Employer").
(ii) The Option shall be exercised by giving written notice of such exercise to the Company in the form attached hereto as Exhibit A; provided, however, that an Option may not be exercised at any one time as to fewer than one hundred (100) shares (or such number of shares as to which the Option is then exercisable if such number of shares is less than one
hundred (100)). The Option Price shall be paid or satisfied in full, at the time of exercise, in cash, in shares of Common Stock owned by Optionee for at least six months having a Fair Market Value equal to such Option Price or in a combination of cash and such shares of Common Stock. In addition, payment may also be made in whole or in part in the form of an option to acquire Common Stock or in the form of another Award (based, in each case, on the Fair Market Value of such option or Award on the date the Option is exercised, as determined by the Committee).
(iii) Subject to the provisions of subparagraph (iv) below, the Option shall vest with respect to ______ of the Option Shares on each Vesting Date (as herein defined). For purposes hereof, the term "Vesting Date" shall mean each of the following ____ dates: _______________________.
(iv) In the event that: (a) Optionee dies while in the employ of the Employer or within three (3) months after the termination of employment with Employer for any reason; or (b) Optionee's employment with the Employer terminates by reason of Optionee's Disability, then in any such case the Option shall vest in full and may be, unless earlier terminated or expired, exercised by Optionee (or by Optionee's estate or by a person who acquired the right to exercise such Option by bequest or inheritance or otherwise by reason of the death or Disability of Optionee) at any time during the stated term of the Option. For the purpose of this Agreement and notwithstanding any provision(s) of the Plan or this Agreement to the contrary, subject to the preceding sentence, in the event Optionee's employment with the Employer is terminated due to Retirement (other than as the result of Optionee's death or Disability) prior to ________, 20__, then the Option, to the extent the Option has vested and unless it earlier terminates or expires, may be exercised at any time during the stated term of the Option, with the unvested portion of the Option being forfeited. In the event Optionee's employment with Employer is terminated due to Retirement (including as the result of Optionee's death or Disability) on or following __________, 20___, unless terminated or expired, the Option shall become immediately vested and nonforfeitable for the ten-year period following the Date of Grant. In the event that there occurs a Change of Control, then in such case the Option shall vest in full and, unless earlier terminated or expired, may be exercised by Optionee (or by Optionee's estate or by a person who acquired the right to exercise such Option by bequest or inheritance or otherwise by reason of the death or Disability of Optionee) within one (1) year following the Change in Control. Subject to the first sentence of this subparagraph (iv), in the event that Optionee's employment with the Employer terminates other than by reason of Optionee's death or Disability, then the Option, to the extent the Option has vested and unless it earlier terminates or expires, may be exercised within three (3) months following the termination of such employment, with the unvested portion of the Option being forfeited. Nothing in this Agreement or in any Option granted pursuant hereto shall confer upon Optionee any right to continue in the employ or service of the Employer or interfere in any way with the right of the Employer to terminate Optionee's employment at any time.
5. Option and Option Shares Subject to Plan. The Option and the Option Shares shall be subject to, and the Company and Optionee agree to be bound by, all of the terms and conditions of the Plan, as the same shall be amended from time to time in accordance with the
terms thereof. A copy of the Plan, as amended, is attached hereto as Exhibit B and made a part hereof as if fully set out herein.
6. Covenants and Representations of Optionee. Optionee represents, warrants, covenants and agrees with the Company as follows:
(i) Optionee is not acquiring the Option Shares based upon any representation, oral or written, by any person with respect to the future value of, or income from, the Option Shares but rather upon an independent examination and judgment as to the prospects of the Company;
(ii) Optionee is able to bear the economic risks of the investment in the Option Shares, including the risk of a complete loss of his or her investment therein;
(iii) Optionee understands and agrees that the Option Shares may be issued and sold to Optionee without registration under any state law relating to the registration of securities for sale, and in such event will be issued and sold in reliance on exemptions from registration under appropriate state laws;
(iv) The Option Shares cannot be offered for sale, sold or transferred by Optionee other than pursuant to: (A) an effective registration under applicable state securities laws or in a transaction which is otherwise in compliance with such laws; (B) an effective registration under the Securities Act of 1933, as amended (the "1933 Act"), or in a transaction otherwise in compliance with the 1933 Act; and (C) evidence satisfactory to the Company of compliance with the securities laws of all applicable jurisdictions. The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the foregoing laws;
(v) The Company will be under no obligation to register the Option Shares or to comply with any exemption available for sale of the Option Shares without registration. The Company is under no obligation to act in any manner so as to make Rule 144 promulgated under the 1933 Act available with respect to sales of the Option Shares;
(vi) A legend indicating that the Option Shares have not been registered under the applicable state securities laws and referring to any applicable restrictions on transferability and sale of the Option Shares may be placed on the certificate or certificates delivered to Optionee and any transfer agent of the Company may be instructed to require compliance therewith;
(vii) Optionee realizes that the purchase of the Option Shares is a speculative investment and that any possible profit therefrom is uncertain;
(viii) Optionee will notify the Company prior to any sale of the Option Shares within one year of the date of the exercise of all or any portion of the Option; and
(ix) The agreements, representations, warranties and covenants made by Optionee herein extend to and apply to all of the Common Stock of the Company issued to Optionee from time to time pursuant to this Option. Acceptance by Optionee of the certificate(s) representing such Common Stock shall constitute a confirmation by Optionee that all such agreements, representations, warranties and covenants made herein shall be true and correct at such time.
7. Withholding. If Optionee recognizes compensation income as a result of the exercise of the Option granted hereunder, Optionee shall remit in cash to the Company the minimum amount of federal and state income and employment tax withholding which the Company is required to remit to the Internal Revenue Service or applicable state department of revenue in accordance with the then current provisions of the Code or applicable state law. Optionee shall pay the full amount of such withholding simultaneously with the exercise of the Option or upon the occurrence of any other event that results in the recognition of compensation income by Optionee. The failure by Optionee to remit the full amount of withholding due may, in the discretion of the Company, result in the forfeiture of the related benefit notwithstanding any other provision of this Agreement.
8. Governing Law. This Agreement shall be construed, administered and enforced according to the laws of the State of Maryland, without regard to the conflicts of laws provisions thereof; provided, however, the Option may not be exercised except, in the reasonable judgment of the Committee, in compliance with exemptions under applicable state securities laws of the state in which Optionee resides, and/or any other applicable securities laws.
9. Successors. This Agreement shall be binding upon and inure to the benefits of the heirs, legal representatives, successors and permitted assigns of the parties.
10. Notice. Except as otherwise specified herein, all notices and other communications under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of such recipient. Any party may designate any other address to which notices shall be sent by giving notice of such address to the other parties in the same manner provided herein.
11. Severability. In the event that any one or more of the provisions or portion thereof contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
12. Entire Agreement. Subject to the terms and conditions of the Plan, this Agreement expresses the entire understanding and agreement of the parties hereto with respect to such terms, restrictions and limitations. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
13. Violation. Any transfer, pledge, sale, assignment or hypothecation of the Option except in accordance with this Agreement shall be a violation of the terms hereof and shall be void and without effect.
14. Headings. Section headings used herein are for convenience of reference only and shall not be considered in interpreting this Agreement.
15. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
16. Counterparts. This Agreement may be executed by the signatures of each of the parties hereto, or to a counterpart of this Agreement, and all such counterparts shall collectively constitute one Agreement. Facsimile signatures shall constitute original signatures for purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on the day and year first set forth above.
CORRECTIONS CORPORATION OF AMERICA
By:________________________________________
Title:_____________________________________
OPTIONEE:
Signature:_________________________________
Name (printed):____________________________
EXHIBIT 10.16
RESTRICTED STOCK AGREEMENT
This RESTRICTED STOCK AGREEMENT (the "Agreement") is made this ___ day of _________, 20__, by and between CORRECTIONS CORPORATION OF AMERICA, a Maryland corporation (the "Company"), and ___________ (the "Recipient").
W I T N E S S E T H:
WHEREAS, the Company has adopted the Amended and Restated Corrections Corporation of America 2000 Stock Incentive Plan (the "Plan"), which authorizes the Company to award restricted shares ("Restricted Shares") of its common stock, $0.01 par value per share (the "Common Stock"), to key employees of the Company and/or its affiliates (individually, a "Restricted Stock Award"); and
WHEREAS, the Company and Recipient wish to confirm the terms and conditions of a Restricted Stock Award to Recipient on _________, 20__ (the "Date of Award").
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed between the parties hereto as follows:
1. Definitions. Except as provided in this Agreement, or unless the context otherwise requires, the terms used herein shall have the same meaning as in the Plan.
2. Award of Shares. Upon and subject to the terms, restrictions, limitations and conditions stated herein, the Company hereby awards to Recipient _____ Restricted Shares of the Company's Common Stock (the "Shares").
3. Rights; Vesting; Forfeiture. Except as otherwise provided herein, Recipient shall have full right, title and interest in the Shares to the extent such Shares have vested in accordance with subparagraph (iii) below.
(i) During the Vesting Period (as defined below) and prior to the vesting of the Shares, the Shares may not be sold, assigned, transferred, pledged or otherwise encumbered by Recipient. Certificates issued with respect to the Shares shall be registered in the name of Recipient and deposited by Recipient with the Company, and any such certificates shall bear an appropriate legend disclosing the restrictions imposed on the Shares hereunder and by the Plan. Upon the lapse of the restrictions applicable to the Shares, the Company shall deliver such certificates to Recipient or Recipient's legal representative, as the case may be.
(ii) During the Vesting Period the Recipient shall have all rights of a stockholder of the Company (except as otherwise provided herein), including without limitation the right to vote and receive dividends on the Shares. If as a result of a stock dividend, stock split, recapitalization or other adjustment in the capital stock or stated capital of the Company, or
as the result of a merger, consolidation, or other reorganization, the Common Stock is increased, reduced or otherwise changed and by virtue thereof, Recipient shall be entitled to new or additional or different shares, with such new or additional shares being subject to the same terms, conditions and restrictions as applicable to the Shares.
(iii) The Shares shall vest in accordance with Schedule A attached hereto and made a part hereof, provided that Recipient is employed by the Company or an Affiliate Corporation (the "Employer") at all times following the Date of Award and prior to and on the Vesting Dates (the "Vesting Period"). If, at any time during the Vesting Period, Recipient's employment with Employer is terminated for any reason other than as a result of the death, Disability or Retirement of Recipient, all of the Shares held by such Recipient shall immediately and automatically be forfeited to the Company without monetary consideration and shall be automatically canceled and retired. If (i) Recipient shall die while in the employ or service of the Employer or within a period of three (3) months thereafter, (ii) Recipient's employment or service with the Employer shall terminate by reason of Disability, or (iii) there occurs a Change in Control, then in any such case all Shares shall become immediately vested and nonforfeitable. For the purposes of this Agreement and notwithstanding any provision(s) of the Plan or this Agreement to the contrary, subject to the preceding sentence, in the event Recipient's employment with the Employer is terminated due to Retirement (other than as the result of Recipient's death or Disability) prior to December 31, 20___, then the unvested portion of the Shares shall immediately and automatically be forfeited to the Company without monetary consideration and shall be automatically canceled and retired. In the event Recipient's employment with the Employer is terminated as a result of Retirement on or after December 31, 20___, unless earlier terminated or expired, and assuming that the applicable performance measures set forth in Schedule A have been met, the Shares shall become immediately vested and nonforfeitable. Notwithstanding the proviso in the first sentence of this Section 3(iii) and for purposes of clarity, if the Recipient's employment is terminated as a result of Retirement on or after December 31 in any given fiscal year but prior to the Vesting Date (as such term is defined in Schedule A) in such year, then the applicable portion of the Shares, if any, shall vest on the Vesting Date in the manner set forth in Schedule A despite the fact that the Recipient is no longer an employee of the Company on such Vesting Date.
4. Share Award and Shares Subject to Plan. The Restricted Stock Award represented by this Agreement and the Shares shall be subject to, and the Company and Recipient agree to be bound by, all of the terms and conditions of the Plan, as the same shall be amended from time to time in accordance with the terms thereof. A copy of the Plan, as amended, is attached hereto as Exhibit A and made a part hereof as if fully set out herein.
5. Covenants and Representations of Recipient. Recipient represents, warrants, covenants and agrees with the Company as follows:
(i) The Shares cannot be offered for sale, sold or transferred by Recipient other than pursuant to: (A) an effective registration under applicable state securities laws or in a
transaction which is otherwise in compliance with such laws; (B) an effective registration under the Securities Act of 1933, as amended (the "1933 Act"), or in a transaction otherwise in compliance with the 1933 Act; and (C) evidence satisfactory to the Company of compliance with the securities laws of all applicable jurisdictions. The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the foregoing laws;
(ii) The Company will be under no obligation to register (or maintain the registration of) the Shares or to comply with any exemption available for sale of the Shares without registration. The Company is under no obligation to act in any manner so as to make Rule 144 promulgated under the 1933 Act available with respect to sales of the Shares; and
(iii) If applicable, a legend indicating that the Shares have not been registered under the applicable state securities laws and referring to any applicable restrictions on transferability and sale of the Shares may be placed on the certificate or certificates delivered to Recipient and any transfer agent of the Company may be instructed to require compliance therewith.
6. Governing Law. This Agreement shall be construed, administered and enforced according to the laws of the State of Maryland, without regard to the conflicts of laws provisions thereof; provided, however, the Restricted Shares may not be sold except, in the reasonable judgment of the Committee, in compliance with exemptions under applicable state securities laws of the state in which Recipient resides, and/or any other applicable securities laws.
7. Successors. This Agreement shall be binding upon and inure to the benefits of the heirs, legal representatives, successors and permitted assigns of the parties.
8. Notice. Except as otherwise specified herein, all notices and other communications under this Agreement shall be in writing and shall be deemed to have been given if personally delivered or if sent by registered or certified United States mail, return receipt requested, postage prepaid, addressed to the proposed recipient at the last known address of such recipient. Any party may designate any other address to which notices shall be sent by giving notice of such address to the other parties in the same manner provided herein.
9. Severability. In the event that any one or more of the provisions or portion thereof contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, the same shall not invalidate or otherwise affect any other provisions of this Agreement and this Agreement shall be construed as if such invalid, illegal or unenforceable provision or portion thereof had never been contained herein.
10. Entire Agreement. Subject to the terms and conditions of the Plan, this Agreement expresses the entire understanding and agreement of the parties hereto with respect to such terms, restrictions and limitations. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.
11. Violation. Any transfer, pledge, sale, assignment or hypothecation of the Shares except in accordance with this Agreement shall be a violation of the terms hereof and shall be void and without effect.
12. Headings. Section headings used herein are for convenience of reference only and shall not be considered in interpreting this Agreement.
13. Specific Performance. In the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the party or parties who are thereby aggrieved shall have the right to specific performance and injunction in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative.
14. Counterparts. This Agreement may be executed by the signatures of each of the parties hereto, or to a counterpart of this Agreement, and all such counterparts shall collectively
constitute one Agreement. Facsimile signatures shall constitute original signatures for purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on the day and year first set forth above.
CORRECTIONS CORPORATION OF AMERICA
By: ____________________________________
Title:__________________________________
RECIPIENT:
Signature:_____________________________
Name (printed):________________________
Exhibit 10.26
CORRECTIONS CORPORATION OF AMERICA (THE "COMPANY")
SUMMARY OF DIRECTOR AND EXECUTIVE OFFICER COMPENSATION
I. DIRECTOR COMPENSATION. Directors who are employees of the Company do not receive additional compensation for serving as directors of the Company. The following table sets forth current rates of cash compensation for the Company's non-employee directors.
RETAINERS AND FEES 2006 ------------------ ---- Board retainer....................................................... $ 50,000 Board meeting fee.................................................... $ 3,000 Audit chair retainer................................................. $ 10,000 Audit member retainer................................................ $ 2,000 Compensation, Nominating and Governance chair retainer............... $ 5,000 Committee chair meeting fee (excluding Executive).................... $ 2,500 Non-chair committee meeting fee...................................... $ 2,000 |
In addition to the cash compensation set forth above, each non-employee director receives a nondiscretionary annual grant of a non-qualified option for the purchase of 4,000 shares of the Company's common stock. The option has an exercise price equal to the fair market value of the stock on the grant date and is fully vested as of the grant date.
II. EXECUTIVE OFFICER COMPENSATION. The following table sets forth the annual base salaries, which become effective April 1, 2006, and the fiscal 2005 performance bonuses provided to the Company's Chief Executive Officer and four most highly compensated executive officers (the "Named Executive Officers").
FISCAL 2005 EXECUTIVE OFFICER 2006 SALARY BONUS AMOUNT ----------------- ----------- ------------ John D. Ferguson $ 700,000 $ 677,727 Irving E. Lingo, Jr. $ 353,500 $ 338,864 Kenneth A. Bouldin $ 310,500 $ 293,059 Richard P. Seiter $ 290,000 $ 269,983 G. A. Puryear, IV $ 240,000 $ 223,063 |
The Named Executive Officers also participate in the Company's 2006 Cash Bonus Plan and receive long-term incentive awards pursuant to the Company's stockholder approved equity incentive plans.
III. ADDITIONAL INFORMATION. The foregoing information is summary in nature. Additional information regarding director and Named Executive Officer compensation will be provided in the Company's proxy statement to be filed in connection with the 2006 annual meeting of stockholders.
EXHIBIT 21
LIST OF SUBSIDIARIES OF CORRECTIONS CORPORATION OF AMERICA
First Tier Subsidiaries: CCA of Tennessee, LLC, a Tennessee limited liability company
Prison Realty Management, Inc., a Tennessee corporation
CCA Properties of America, LLC, a Tennessee limited liability company
CCA Properties of Texas, L.P., a Delaware limited partnership
CCA Western Properties, Inc., a Delaware corporation
Second Tier Subsidiaries: CCA Properties of Arizona, LLC, a Tennessee limited liability company
CCA Properties of Tennessee, LLC, a Tennessee limited liability company
CCA International, Inc., a Delaware corporation
Technical and Business Institute of America, Inc., a Tennessee corporation
TransCor America, LLC, a Tennessee limited liability company
TransCor Puerto Rico, Inc., a Puerto Rico corporation
CCA (UK) Ltd., a United Kingdom corporation
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
Registration Statement (Form S-8 No. 333-70625) pertaining to the Corrections Corporation of America (formerly Prison Realty Trust) Amended and Restated 1997 Employee Share Incentive Plan,
Registration Statement (Form S-4 No. 333-41778) pertaining to the merger of Corrections Corporation of America, a Tennessee corporation, with and into CCA of Tennessee, Inc.,
Registration Statement (Form S-8 No. 333-69352) pertaining to the Corrections Corporation of America Amended and Restated 2000 Stock Incentive Plan,
Registration Statement (Form S-8 No. 333-115492) pertaining to the registration of additional shares for the Corrections Corporation of America Amended and Restated 2000 Stock Incentive Plan,
Registration Statement (Form S-8 No. 333-115493) pertaining to the Corrections Corporation of America Non-Employee Directors' Compensation Plan,
Registration Statement (Form S-8 No. 333-69358) pertaining to the Corrections Corporation of America 401(k) Savings and Retirement Plan,
Registration Statement (Form S-3/A No. 333-104240) pertaining to a shelf registration of debt securities, guarantees of debt securities, preferred stock, common stock, or warrants, and pertaining to certain shares of common stock registered on behalf of a selling shareholder; and
Registration Statement (Form S-3 ASR No. 333-131072) pertaining to a shelf registration of debt securities, guarantees of debt securities, preferred stock, or any combination of the foregoing, including by way of units consisting of more than one security;
of our reports dated March 1, 2006 with respect to the consolidated financial statements of Corrections Corporation of America and Subsidiaries, Corrections Corporation of America and Subsidiaries' management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over financial reporting of Corrections Corporation of America and Subsidiaries, included in this Annual Report (Form 10-K) for the year ended December 31, 2005.
/s/ Ernst & Young LLP ---------------------- Ernst & Young LLP Nashville, Tennessee March 1, 2006 |
EXHIBIT 31.1
CERTIFICATION OF THE CEO PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, John D. Ferguson, certify that:
1. I have reviewed this annual report on Form 10-K of Corrections Corporation of America;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 7, 2006 /s/ John D. Ferguson -------------------------------- John D. Ferguson President and Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION OF THE CFO PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Irving E. Lingo, Jr., certify that:
1. I have reviewed this annual report on Form 10-K of Corrections Corporation of America;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statement made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 7, 2006 /s/ Irving E. Lingo, Jr. --------------------------------------------------- Irving E. Lingo, Jr. Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Corrections Corporation of America (the "Company") on Form 10-K for the period ending December 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John D. Ferguson, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ John D. Ferguson ------------------------------------- John D. Ferguson President and Chief Executive Officer March 7, 2006 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Corrections Corporation of America (the
"Company") on Form 10-K for the period ending December 31, 2005 as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), I,
Irving E. Lingo, Jr., Executive Vice President and Chief Financial Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ Irving E. Lingo, Jr. ---------------------------------------------------- Irving E. Lingo, Jr. Executive Vice President and Chief Financial Officer March 7, 2006 |